Sirit Lays Off Staff, Closes Plants

Sirit also hopes to boost its presence in the supply chain market with a new executive—Tony Sabetti—who joins the company as VP of sales for Sirit's RF Solutions division, the group that oversees development and marketing of RFID for the supply chain market, including the SAMSys products Sirit acquired.

"We still believe in the opportunities for that sector," says Dawalibi. "We are careful to make sure we don't inflate expectations, especially on the side of the supply chain, because it will take some time before we see widespread adoption of RFID in the supply chain."

He adds that he doesn't think the market has changed all that much in the past year. "When we purchased SAMsys, we all recognized the supply chain as a fantastic opportunity. We knew [the market] would happen, but what's not been clear is when it will."

Prior to signing on with Sirit, Sabetti spent 21 years at Texas Instruments, where he served as a senior executive within TI's global RFID group. Sabetti says the position with Sirit was particularly appealing to him because of Sirit's commitment to RFID's use in supply chains and other up-and-coming markets, including pharmaceuticals. "The vision of [Dawalibi] to acquire SAMSys and TradeWind as a way of accelerating Sirit into new markets is really interesting," he says. "It is a pretty exciting time for Sirit, and a compelling reason why I left Texas Instruments and came here."

Sirit's cuts include the closing of two of its development and engineering facilities—one in the United Kingdom and one in Raleigh, N.C. The restructuring will result in severance and related non-recurring costs of approximately $400,000, which the company will pay primarily in the fourth quarter of 2006.

The layoffs and plant closings seem to be prudent moves on Sirit's part, says Reik Read, an analyst with Robert W. Baird & Co., a provider of investment banking, wealth-management and other financial services. "From a consolidation standpoint, this makes sense. In Sirit's case, it sounds like it was developing an important platform and wanted the people and infrastructure around as long as it needed to make sure the platform was launched appropriately."

Read says Sirit isn't the only RFID company that's rethinking organizational structures and investments. "Companies in general are becoming a little bit more stringent in how they will invest capital in RFID," he says.

That's in part because the UHF RFID market has not expanded as quickly as some had thought. "There was a hope that there'd be somewhere between 250 million to 350 million tags used this year. I don't know what the numbers will end up being, but most people in the industry thing it will wind up less than that."

Robert W. Baird's Read says despite the lower-than-expected volume of UHF tag sold this year, there are indicators that the market is growing. "There's a lot more work [on RFID implementations] that's been done than what I expected. End users are really putting their noses to the grindstones to understand the technology," he says. "The industry is setting itself up better for the future by going through this development."