RFID EURASIA 2007

RFID EURASIA 2007

Business Descriptions and Financial Performance Analysis of Public RFID Companies

Authors’ Contact Information

Suat KASAP *

Hacettepe Üniversitesi Mühendislik Fakültesi

Endüstri Mühendisliği Bölümü 06800 Beytepe / ANKARA E-mail: skasap@hacettepe.edu.tr Tel/Fax: 0 312 297 6885

Murat Caner TESTİK Hacettepe Üniversitesi Mühendislik Fakültesi

Endüstri Mühendisliği Bölümü 06800 Beytepe / ANKARA E-mail: mtestik@hacettepe.edu.tr Tel/Fax: 0 312 297 6885

Nihat KASAP Sabancı Üniversitesi

Yönetim Bilimleri Fakültesi Orhanlı, Tuzla 34956 İstanbul E-mail: nihatk@sabanciuniv.edu Tel/Fax: 0 216 483 9684

* Corresponding Author

Business Descriptions and Financial Performance Analysis of Public RFID Companies

Suat Kasap

, Murat Caner Testik

, and Nihat Kasap

*

Hacettepe University Faculty of Engineering Department of Industrial Engineering

06800 Beytepe - Ankara TURKEY

**

Sabanci University Faculty of Management

34956 Orhanli Tuzla - Istanbul TURKEY

enables companies to develop applications that create value by tracking and identifying objects, animals or people. Business applications of this technology can be seen in areas such as manufacturing, supply chain management, software integration, security systems, asset tracking and many others. RFID technology was predicted to be one of the “top ten” technologies in 2004 by CNN. In this paper, we investigate public RFID companies traded on the stock exchange markets, summarize their financial performance, and describe their RF products, services, and applications.

I. I

Automatic identification technologies have been used in a wide range of applications for reducing the amount of time and labor needed to input data and for improving data accuracy. As an important automatic identification technology, radio frequency identification (RFID) systems allow contactless reading and these systems are particularly successful in manufacturing and other environments where traditional identification technologies such as bar codes can not perform well. By integrating the RFID system into the business model, companies may save time, lower labor cost, improve products and provide better service.

RFID technology was predicted to be one of the “top ten”

technologies in 2004 by CNN. Although, the RFID market is less than four years old, it has been applied to many different industries, from retail industry to logistics, or from healthcare to service business industry – and it is still growing. As a result of wide spectrum of application areas, one can expect to observe that RFID companies tend to be specialized.

Particularly, RFID has fundamental influences on today's retailing and supply chain management. There are a wide range of RFID systems currently being used or being developed. Examples to these systems include but not limited to the following; automatic vehicle and personnel access control for security, airport passenger and baggage tracking [1,2], tracing blood for cutting down errors such as giving patients wrong blood types [3], real-time inventory control by automated identification of items in warehouses, tracking and management of physical files, tracking of books in the libraries. For some other applications, interested reader is referred to [4].

RFID solution providers claim that their technology and solutions bring significant benefits and have valuable uses in practice. As new RFID solutions being developed and more RFID tags and equipments being used, these solutions will become more cost effective and RFID businesses are expected to grow rapidly. By using RFID, companies can save even more money, labor and time. That is what RFID does.

Businesses of any type can use RFID to become more efficient. Since RFID is fairly new, it’s difficult to measure resulting sales increases or heightened customer satisfaction quotients. On the other hand, according to IDC estimation (IDC is a subsidiary of International Data Group a leading technology media, research, and events company and provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets) companies in the retail sector will spend nearly $1.3 billion on RFID in their supply chain operations in 2008, compared to about $91.5 million in 2003 which corresponds to annual growth rate of 70 percent. In a similar look; the Wireless Data Research Group, projects that the global market for RFID will increase from $1 billion in 2003 to $3 billion in 2007 [5]. This increase in market size will come from wide variety of applications. In this paper, several kinds of publicly traded companies that participate in the RFID market, including chip makers, system integrators, standards bodies, software writers, distributors, and buyers are studied in detail.

II. P

RFID C

AND THEIR B

DESCRIPTIONS

Companies of RFID industry have lofty goal. By eliminating wasteful time and labor, they hope to save money, to improve the product or to provide better service. This industry is a fast growing one and there are many companies in this area. Some of these companies design and manufacture RFID technologies and equipments, some offer consulting services for RFID adoption, and some are providers of other RFID solutions. The RFID industry may be composed into hardware, software, system integration, printing, and services sectors.

We have analyzed thirty nine public RFID companies

traded on the stock exchange markets. For a detailed reading,

one can look at to [5]. Most of these companies, more

specifically twenty eight of them are from USA, and the rest of them are from UK, Canada, Germany, India, Israel, Korea, Japan, and Finland. Furthermore, some of these companies have RFID as their primary business and some have RFID as part of their business. Names, locations, general business descriptions, and RFID business descriptions (products, services, and applications) of these companies are provided in detail in Table 1.

III. F

P

ANALYSIS

P

RFID C

To analyze financial performances of the companies listed in Table 1, first, we have to identify the stock exchange markets where the companies are traded on. It can be seen that most of these companies are traded on the USA based stock exchange markets such as NASDAQ have sixteen RFID companies, New York Stock Exchange (NYSE) have fourteen RFID companies, OTC Bulletin Board (OTCBB) have two RFID companies. NASDAQ is the largest U.S. electronic stock market with approximately 3,200 companies; it lists more companies and, on average, trades more shares per day than any other U.S. market. NASDAQ is home to companies that are leaders across all areas of business, including technology, retail, communications, financial services, transportation, media and biotechnology. In addition to the US based stock exchange markets, both London Stock Exchange (LSE) and Toronto Stock Exchange (TSE) markets have two RFID companies. Korea Stock Exchange, Tokyo Stock Exchange, and India Stock Exchange markets have only one RFID company. For the financial performances analysis, we have collected their stock exchange market data from January 1, 2005 to July 15 2007 for the most of the companies except one. We were not able to reach of the market data for SATO America, Inc. that is traded in Tokyo Stock Exchange Market.

Therefore, we ignored this company for the financial performance analysis. For each company, trading symbols, trading exchange markets, market capitals, current prices by July 15 2007, average trading volumes, trading price range for the last 52 weeks, and return on investments for the year 2005, 2006, and 2007 are provided in Table 2.

Price range and market capitals change with a wide range.

Return on investments also varies from year to year or from company to company. We have straight winner and loser three tickers for three years CCL-A.TO, BAX, BT-A.L and DOC, ADSX, SCKT respectively. For the year 2005, the best and worst two tickers were HEII, CCL-A.TO and SI.TO, DOC respectively. For the year 2006, the best and worst two tickers were ATML, AIDO.OB and HEII, SI.TO respectively. For the year 2007, the best and worst two tickers were SI.TO, ALAN and DOC, IDSY respectively. Note that, HEII was the best performer in 2005 and also the worst performer in 2006 and SI.TO was the one of the worst performers in 2005 and 2006 and the best performer in 2007.

IV. C

The RFID industry is emerging from its transition stage as businesses are ramping up their use of RFID technology. It is expected that this profitable sector will attract more investors

looking for opportunities on the horizon. In the end RFID should make customers happier, companies richer and investors happier and richer.

R

[1] R.B. Ferguson, “Logan airport to demonstrate baggage, passenger RFID tracking”, http://www.eweek.com/article2 /0,1895,1962690,00.asp, May 16, 2006.

[2] G. Simpson, “New RFID tech would track airport passengers”, http://news.zdnet.com/2102-1009_22- 6125799.html, October 13, 2006.

[3] S. Ranger, “RFID blood-tracking trial planned,”

http://www.silicon.com/publicsector/0,3800010409,39161 664,00.htm, August 22, 2006.

[4] K. Finkenzeller, RFID Handbook: Radio-Frequency Identification Fundamentals and Applications. New York, NY: John Wiley and Sons, 2000.

[5] Z. Asif and M. Mandviwalla, “Integrating The Supply Chain With RFID: A Technical and Business Analysis”

Communications of the Association for Information Systems, Vol: 15 393-427, 2005.

[6] Radio Frequency Identification (RFID) Technology Stocks

Directory (n.d.). Retrieved March 29, 2007, from

http://www.rfidinvesting.com/RFID/Stock_List.asp.

TABLE I

PUBLIC RFID COMPANIES AND BUSINESSES, THEIR PRODUCTS, SERVICES, AND APPLICATIONS

Name Location Business Description RFID Product/Service/Application

Advanced ID Corp. Canada Markets low frequency RFID microchips, scanners, and PETtrac database, ultra high frequency DataTRAC tags, readers, and software solutions.

Animal and biological sciences markets, biosecurity and food safety issues related to the livestock industry.

Alanco Technologies, Inc. USA Provider of information technology solutions. Design, production, marketing, and distribution of RFID tracking technology.

Atmel Corp. USA Design and manufacture of microcontrollers, advanced logic, mixed-signal, nonvolatile memory and RF components.

Security and access control, manufacturing and logistics (supply chain and assets management, inventory control), transportation and animal identification.

Applied Digital USA Develops innovative security products for consumer,

commercial, and government sectors. Security for people, animals, food supply, government/military arena, and commercial assets.

Avery Dennison Corp. USA Produces pressure-sensitive materials, office products, tickets, tags, labels, and other converted products. It operates in three segments: Pressure-Sensitive Materials (PSM), Office and Consumer Products (OC), and Retail Information Services (RIS).

RIS segment offers price marking and brand identification products, which include RFID tags and inplays, pressure-sensitive stamps, and barcode printers for retailers, apparel manufacturers, distributors, and industrial customers.

Axcess International, Inc. USA Provides security and asset management systems that automatically locate, identify, track, monitor, count and protect people, personal property and vehicles.

Personnel and vehicle access control and automatic asset tracking and protection.

BT Auto-ID Services UK Offers a suite of services that allows companies to control their

physical assets in the supply chain and elsewhere. Works with tag and reader manufacturers, to deliver RFID solutions to customers.

Baxter International, Inc. USA Offers the QuickFind Asset Management System Utilizes RFID technology to determine the location of any tagged asset.

Bearingpoint, Inc. USA Systems integrator Helps organizations create a RFID program.

Brady Corporation USA Engages in the manufacture and marketing of identification solutions and specialty materials worldwide.

Sells RFID tags and readers CCL Label USA Provides pressure-sensitive labels and promotional products for

the packaging, promotional and pharmaceutical industries.

Designs and prints RFID and anti-counterfeiting labels.

Checkpoint Systems, Inc. USA Manufactures and markets integrated system solutions for retail security, labeling and merchandising.

Provides electronic article surveillance systems and tags using RF.

Digital Angel Corporation USA Provides sensor and communications technologies that enable identification, location tracking, and condition monitoring of pets, humans, fish, and livestock through implantable microchips, as well as message monitoring of aircraft in remote locations.

Develops, manufactures, and markets RF and visual identification devices for the companion animal, fish and wildlife, and livestock markets worldwide. Its RFID products comprise miniature electronic microchips, scanners, and injection systems.

HEI, Inc. USA Provides a range of engineering, product design, automation and

test, manufacturing and fulfillment services and solutions. Design, manufacture, and sales of ultra-miniature radio frequency products.

I.D. Systems, Inc. USA Engages in the development, marketing, and sale of wireless solutions for managing and securing enterprise assets.

Offers customers integrated wireless solutions to control, monitor, track, and analyze the enterprise assets, which include industrial vehicles.

Infineon Technologies AG GermanyDesign, development, and marketing of semiconductors and

systems solutions. Provides RF transceivers and RF products such as Bluetooth devices, and RF-power components for wireless infrastructure.

Infosys Technologies Ltd. India Provides solutions for RFID adoption to address the key challenges to RFID adaptation.

Solutions for assessing the impact and business value of RFID, RFID-enabled business process transformation, RFID technology selection and architecture definition, RFID pilot/field trial for business case validation.

Innovision Res. & Tech. plc UK Designs, develops and licenses RFID solutions. Produces RFID tags and readers.

Intermec, Inc. USA Design, development, manufacture, integration, and sale of wired and wireless automated identification and data collection, mobile computing, bar code printers, label media, and RFID products and systems.

Provides RFID products and services primarily comprising RFID tags that are programmed to contain identification, serial numbers, history, and other attributes.

Int. Busines Machines Corp. USA Operates as an information technology (IT) company. Support devices used in RFID setups, WebSphere-based RFID middleware that automates the collection, integration, and management of data collected from tags and readers at distribution centers and stores.

International Paper Co. USA Paper, packaging, and forest products. Design, development and implementation of integrated RFID packaging and supply chain applications, offer RFID services such as education about the potential RFID technologies, developing and implementing a RFID strategy.

TABLE I (continued)

PUBLIC RFID COMPANIES AND BUSINESSES, THEIR PRODUCTS, SERVICES, AND APPLICATIONS

Name Location Business Description RFID Product/Service/Application Manhattan Associates, Inc. USA Provides technology-based solutions to improve

the effectiveness and the efficiencies within and across the supply chain.

Provides products that support or enhance the functionality of the product groups, such as performance management and RFID.

NCR Corp. USA Focuses on facilitating the adoption of RFID in the retail environment.

Creates and tests proof-of-concept prototypes using RFID, uses thermal transfer printing technology to create RFID-equipped labels.

Patni Computer Systems Ltd. India Provides information technology services and business solutions.

Offers RFID services including feasibility studies, business-case analysis, product/process/IT audits, and both pilot programs and full- scale rollouts.

Printronix, Inc. USA Supplier of enterprise printing solutions for the industrial marketplace.

Offers a commercial RFID printer.

SATO America, Inc. Japan Manufactures industrial bar code printers. Offers a one-step print and encode solution for a user to adopt RFID.

Samsung Techwin Korea Produces precision machinery, semiconductor equipment & components, other up-to-date products.

Provides finished RFID labels and RFID-enabled manufacturing applications.

ScanSource, Inc. USA operates as a wholesale distributor of specialty technology products, providing distribution sales to resellers in the specialty technology markets.

markets automatic identification and data capture (AIDC) products includes RFID components

SIRIT, Inc. Canada Designs, develops, manufactures and sells RFID technology.

RFID applications include Supply Chain & Logistics, Cashless Payment, Access Control, Automatic Vehicle Identification, Inventory Control & Management, Asset Tracking.

Sirenza Microdevices Inc. USA engages in the design and supply of RF components for the commercial communications, consumer, aerospace and defense, and homeland security equipment markets worldwide.

Its RF components are used in various applications, including mobile wireless infrastructure networks, wireless local area networks, fixed wireless networks, and broadband wireline applications.

Socket Communications, Inc. USA engages in the design, manufacture, and sale of data collection and connectivity products for mobile electronic devices.

Its Data collection products include bar code scanning products, RFID plug-in products, combination plug-in bar code scanners and RFID readers, and plug-in magnetic stripe readers that are designed to collect data on handheld computers, tablet computers, notebook computers, and selected Smartphones.

SPAR Group, Inc. USA supply merchandising and other marketing services

offers in-store event staffing, product sampling, radio frequency identification services, technology services, and marketing research services.

Texas Instruments, Inc. USA Manufactures, markets and sells high-technology components and systems used in the commercial electronic and electrical equipment industry.

Custom-designed sensors, controls and radio frequency identification systems.

3M Co. USA Creates innovative products and services in diversified areas.

Provides RFID solutions for tracking and management of physical files that are stored in centralized file rooms or move through individual offices, RFID-based identification and tracking of library materials.

Tower Semiconductor, Ltd. Israel Manufactures semiconductor integrated circuits (ICs) on silicon wafers. It focuses on complementary metal oxide semiconductor image sensor, embedded non-volatile memory, and mixed signal and RF CMOS technologies

Tower provides manufacturing services for the growing market of mixed signal applications, including wired and wireless communication, RFID, medical, consumer, and industrial.

UPM-Kymmene Corp. Finland Produce, sale, and market magazine papers, newsprint, and fine and specialty papers products.

Manufactures RFID smart labels.

Verisign, Inc. USA Delivers infrastructure services that make the internet and telecommunications networks more intelligent, reliable and secure.

Provides a suite of managed services that allow trading partners to share RFID-enabled product data in real time.

WJ Communications, Inc., USA A RF semiconductor company, provides RF product solutions to communications equipment companies worldwide. It engages in the design, development, and manufacture of products for wireless and cable networks, and RFID systems.

Its RF products primarily include semiconductors, including amplifiers, mixers, RF integrated circuits, transistors, chipsets, and multichip modules; and RFID readers and reader modules.

Zebra Technologies Corp. USA Makes products that enable companies and organizations to improve productivity, deliver better customer service and provide more effective security.

Designs, manufactures and supports RFID printer/encoders.

TABLE II

FINANCIALPERFORMANCES OF PUBLIC RFID COMPANIES

RFID Company Name

Trading Symbol

Stock Exchange Market

Market Capital

Current Price

Average Volume

52 week Range

2007 ROI.

2006 ROI

2005 ROI

Advanced ID Corp. AIDO.OB OTCBB N/A 0.3 50,426.50 0.21 - 0.49 11.11% 85.71% -57.58%

Alanco Technologies, Inc. ALAN NASDAQ 48.44M 2.403 213,497 1.12 - 4.14 76.69% -6.67% -44.00%

Atmel Corp. ATML NASDAQ 2.91B 5.95 9,334,230 4.79 - 6.49 -3.09% 96.43% -21.17%

Applied Digital ADSX NASDAQ 90.52M 1.34 318,468 1.16 - 2.82 -29.10% -37.15% -60.06%

Avery Dennison Corp. AVY NYSE 7.28B 68.33 743,459 58.01 - 71.35 -0.20% 20.83% -7.45%

Axcess International, Inc. AXSI.OB OTCBB 43.10M 1.5 7,046.08 0.87 - 1.80 25.00% 37.65% -53.14%

BT Auto-ID Services BT-A.L LSE N/A 329.75 52,600,400 245 - 338 8.56% 35.35% 9.73%

Baxter International, Inc. BAX NYSE 38.15B 58.55 3,087,820 38.11 - 58.75 26.19% 19.25% 8.82%

Bearingpoint, Inc. BE NYSE N/A 7.49 2,306,270 6.90 - 9.00 -5.19% 0.25% -1.75%

Brady Corporation BRC NYSE 2.02B 37.37 257,783 30.50 - 40.88 -0.27% 3.58% 19.41%

CCL Label CCL-A.TO TSE N/A 49 143.421 27.10 - 49.00 63.88% 4.91% 48.05%

Checkpoint Systems, Inc. CKP NYSE 1.08B 27.44 183,732 16.41 - 28.00 35.17% -18.12% 36.57%

Digital Angel Corporation DOC NYSE 69.90M 1.57 92,902.90 1.39 - 3.67 -43.93% -9.09% -62.44%

HEI, Inc. HEII NASDAQ 9.61M 1.01 15,502 0.85 - 2.94 -32.67% -63.33% 93.78%

I.D. Systems, Inc. IDSY NASDAQ 137.58M 12.09 108,561 11.13 - 23.84 -36.03% -20.66% 35.51%

Infineon Technologies AG IFX NYSE 13.90B 18.58 2,291,270 11.12 - 18.74 31.31% 50.86% -17.27%

Infosys Technologies Ltd. INFY NASDAQ 29.65B 51.91 2,381,490 37.85 - 61.25 -6.52% -32.84% 16.45%

Innovision Res. & Tech. plc INN.L LSE N/A 54 237,557 30.00 - 66.00 31.71% -46.75% -21.83%

Intermec, Inc. IN NYSE 1.64B 27.06 550,395 20.50 - 30.74 11.04% -30.64% 34.13%

Int. Busines Machines Corp. IBM NYSE 161.25B 108.6 7,805,760 75.05 - 109.66 11.75% 17.83% -16.94%

International Paper Co. IP NYSE 17.77B 40.79 2,930,720 31.85 - 40.84 19.16% 0.18% -20.10%

Manhattan Associates, Inc. MANH NASDAQ 768.98M 28.52 215,828 22.10 - 31.20 -5.69% 46.80% -14.45%

NCR Corp. NCR NYSE 9.68B 53.81 1,021,310 33.26 - 54.44 25.43% 25.03% -1.94%

Patni Computer Systems Ltd. PATNI.NS NSE of India N/A 512.6 664,576 364 - 599 21.18% -16.52% 27.78%

Printronix, Inc. PTNX NASDAQ 90.17M 13.5 4,928.26 11.02 - 14.91 9.85% -16.59% -16.00%

SATO America, Inc. 6287 Tokyo SE N/A N/A N/A N/A N/A N/A N/A

Samsung Techwin 006400.KS Korea SE N/A 69,000 523,420 53,400 - 80,700 6.98% -44.57% 2.19%

ScanSource, Inc. SCSC NASDAQ 816.32M 31.59 164,136 25.22 - 34.14 3.91% 10.07% -13.04%

SIRIT, Inc. SI.TO TSE N/A 0.395 475,076 0.14 - 0.46 107.89% -50.00% -76.43%

Sirenza Microdevices Inc. SMDI NASDAQ 665.06M 12.92 1,045,800 6.39 - 13.05 60.70% 71.99% -31.50%

Socket Communications, Inc. SCKT NASDAQ 30.32M 0.95 38,173.50 0.72 - 1.40 -15.93% -1.75% -43.50%

SPAR Group, Inc. SGRP NASDAQ 24.61M 1.3 8,331.37 0.89 - 2.20 5.69% 12.96% -13.46%

Texas Instruments, Inc. TXN NYSE 55.48B 38.7 14,331,600 28.24 - 39.27 32.90% -10.45% 28.64%

3M Co. MMM NYSE 64.98B 90.22 3,480,470 68.28 - 90.24 16.37% 0.22% -5.68%

Tower Semiconductor, Ltd. TSEM NASDAQ 193.41M 1.6 220,196 1.26 - 2.18 -7.51% 9.62% -39.08%

UPM-Kymmene Corp. UPM NYSE 13.42B 25.64 66,246.10 22.94 - 27.08 2.23% 28.03% -11.35%

Verisign, Inc. VRSN NASDAQ 8.24B 33.91 4,327,990 19.25 - 34.68 39.89% 9.37% -34.25%

WJ Communications, Inc., WJCI NASDAQ 117.35M 1.71 104,701 1.35 - 2.50 8.92% -1.88% -55.12%

Zebra Technologies Corp. ZBRA NASDAQ 2.90B 42.01 425,274 32.75 - 42.38 20.03% -18.71% -24.56%