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Recap of the RFID Investor Conference, Part 1

Last week RFID Update attended the 2006 RFID Conference, hosted by investment firm Robert W. Baird & Co. The one-day event catered to the investor community, which was reflected by presentations that tackled higher-level topics than those typically covered at more broadly focused industry conferences. This article has highlights.
Oct 02, 2006This article was originally published by RFID Update.

October 2, 2006—On Wednesday of last week, RFID Update attended the 2006 RFID Conference, hosted at the Four Seasons Hotel in Boston by investment firm Robert W. Baird & Co. The unique one-day event catered to the investor community, and offered a timely overview of the RFID industry and its progress. Many of the industry thought leaders were in attendance, and presentations and panels tackled higher-level topics than those typically covered at more broadly focused industry conferences. It was Baird's fifth RFID conference. The event was moderated by Baird analyst Reik Read, author of the widely-read RFID Monthly and a leading analyst tracking the RFID industry.

The day began with opening remarks from Read, followed by a keynote by Richard Cantwell, Procter & Gamble vice president and chairman of the EPCglobal Board of Governors. The rest of the day was devoted to vendor presentations, as well as two panels. Vendors that presented were Alien, Avery Dennison, Impinj, Intermec, Reva Systems, TAGSYS, ThingMagic, and Zebra. The first panel was on the RFID chip sector, with executives from Impinj, STMicroelectronics, and Texas Instruments as panelists. The second panel discussed systems integration and implementation of RFID; the panelists were ODIN technologies, Rush Tracking Systems, and Xterprise.

There were roughly 120 people in attendance. About half the attendees represented investor interests, from venture capitalist to private equity to institutional funds. The other half was made up of RFID industry participants, be they vendors or end users.

This year's attendance was about the same as last year's, suggesting that perception of RFID as a potential investment opportunity has not grown much over the last twelve months. "Until we really start to see things move forward," Read told RFID Update, "the conferences are probably going to be in that neighborhood of attendance."

Read pointed out, however, that interest in RFID varies widely depending on the investor audience. Investors in public companies, for example, are hard pressed to find a stock that offers a good vehicle to capitalize on the growth in RFID. Stock in "pure play" Alien Technology would have been such a vehicle, but the company's planned IPO was scrapped in August. And existing public companies active in RFID -- Avery Dennison, Intermec, Symbol, and Zebra -- continue to report that sales of the technology represent only a nominal percentage of overall revenues. In the case of Symbol, those sales will become an even smaller percentage of the pie after the company is subsumed by Motorola. "From a public company standpoint, [RFID] is a theme that probably won't impact the results for a couple years to come," Read said.

On the other hand, he noted, interest from investors like venture capitalists who focus on earlier-stage opportunities appears to be quite strong, as evidenced by the funding activity seen over the last year. "From a private equity and venture perspective, you are regularly seeing investments in RFID," said Read. In June, Bear Stearns calculated that private funding in RFID companies over the prior 12 months totaled $175 million (see RFID Funding Tops $175m Over Last 12 Months). That figure excluded financing raised by Alien in July of last year, which puts the sum near a quarter billion dollars.

There is also considerable RFID investment -- albeit hard to measure -- by the vendors themselves. Last week, Zebra completed the $10 million acquisition of an intellectual property portfolio (see Zebra Buys $10m in RFID Intellectual Property), and Avery Dennison recently acquired RF IDentics (see Avery RFID Launches Tech Transfer, Buys Startup). Stan Drobac, Avery Dennison's vice president of RFID applications, said at last week's event that his company is actively investing in RFID research and development efforts, even though to date the technology represents less than 1% of overall revenues. (Granted, Avery Dennison's 2005 revenues were five and a half billion dollars.)

Tomorrow's article will discuss some of the key themes from the event, among them Gen2 performance, return on investment, and the "HF vs. UHF" debate.
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