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E Ink Sheds 37 Workers

E Ink Corp. of Cambridge, Mass., has laid off 37 of 137 workers after shifting its product emphasis from large, updatable signs for retail stores to screens for handheld electronics.

Those laid off on Thursday from the Cambridge facility have been marketing, shipping or otherwise involved with E Ink's original product -- large, easy-to-read electronic signs that can be updated via the Internet, which retail chains like Eckerd drug stores or J.C. Penney have set up as advertising displays.

But the 3-year-old company has always viewed the retail signs as but a first step in the evolution of its product line. Being developed in concert with Lucent Technology's Bell Labs, E Ink's "electronic ink" technology is designed to be printed, erased and updated on or from nearly any surface.

Backed by $53 million in venture capital, as well as unspecified millions from Lucent, E Ink continues to pour money into research for two more product categories: graphic displays for personal digital assistants and other consumer electronic gear and, ultimately, updatable electronic books and newsprint.

Company spokesman Pierce Reid said E Ink is weeks away from announcing new display products for handheld electronic equipment, as well as a new round of investment.

"This is not about dwindling finances -- the funding of this company remains really solid," Reid said. "But like all startups that are staying successful, we have to be smart with our investors' money and watch our cash burn rate. This was a tough decision, but we couldn't justify carrying these people."

Reid said E Ink has developed its small, handheld-screen product ahead of schedule, making it less reliant on the retail signs for revenue. He said an updated version of the large sign technology will be unveiled soon, but that the company will use a much smaller staff to manage that division's sales and operations.

E Ink makes a liquid filled with millions of microcapsules, each containing white particles suspended in dark dye. A grid of electronic transistors embedded in thin plastic film creates electric fields that cause the e-ink to switch from black to white, creating images in the shapes of letters or pictures.

The Lucent-developed plastic allows for a display panel one-quarter the thickness and weight of a standard liquid crystal display (LCD) panel. The displays are also brighter and use far much less battery power than LCD panels, allowing for smaller battery designs for cell phones, PDAs and other handhelds.

By 2004, Lucent and E Ink plan to unveil "electronic books" -- book- or magazine-sized volumes filled with sheets of plastic-coated, e-ink-filled paper on which anything from novels to newspapers can be downloaded and erased.

Reid said all laid off workers received severance packages. He said E Ink is actually hiring developers for its ongoing research and development projects.