Troubled augmented reality company Magic Leap Inc. is said to be exploring its options, including a sale, according to an unconfirmed report.

Bloomberg, citing people familiar with the matter, said the company is working with an adviser to consider strategic options that could include a partnership or selling a significant stake ahead of a potential initial public offering. The report claimed that Magic Leap could fetch more than $10 billion if it pursues a sale.

Potential suitors are said to include Facebook Inc. and Johnson & Johnson, although talks with Facebook apparently never progressed to deal talks because the social media giant wasn’t interested in an acquisition.

Founded in 2011, Magic Leap long promised a revolution in augmented reality technology with product demonstrations that amazed at the time but failed to deliver. After reports that the company may have been promoting vaporware, it finally launched its first headset, the $2,295 Magic Leap One Creator Edition, in 2018. But only 6,000 units reportedly have been sold.

Magic Leap shifted its focus to enterprise AR in December with a new $2,995 headset called the Magic Leap 1 that was a slight update on its earlier product. The headset comes with an Enterprise Suite that includes two years of dedicated support, device management tools, fast device replacements and extended warranties. Those buying the headset were also offered access to a range of AR-friendly world apps that cover areas such as collaboration, location-based experiences and 3D visualization.

How well the new headset has sold is unknown, but despite having raised $2.6 billion in venture capital from backers that included Google, Alibaba and NTT DoCoMo, the expectations were not very high — particularly since it now competes directly with Microsoft Corp.’s well-established HoloLens.

A potential price tag over $10 billion may also be too rich given the company’s failure to deliver a successful product. “For Magic Leap, the valuation of the company will be a question mark because suitors may have to take a long-term bet without substantial near-term revenue,” Bloomberg Intelligence senior analyst Jitendra Waral said, adding that the scalability of the company’s technology could also be an issue.

Waral noted that any potential buyer would have to have the financial capacity to carry the products for some time, since AR is still evolving and mainstream adoption is “a few years away.”

Photo: Magic Leap