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CEO Says Alien Is Back on Track

George Everhart, Alien Technology's new CEO, says the burn rate is down, sales are up and the company is moving forward by targeting key sectors.
Posted By Mark Roberti, 04.09.2007
At last week's DOD RFID Summit, I had the opportunity to sit down for the first time with George Everhart, who took over as CEO of Alien Technology after the company's failed initial public offering. Everhart was given the tough assignment of refocusing and recapitalizing Alien and taking the company forward. He says Alien is back on track, and that righting the company hasn't required radical surgery.

"When I came in, I looked at the plan that was in place and made some minor changes," he says. "For the most part, we're focused on executing the plan that had been in place before I came on."

Everhart says Alien had its best quarter in the fourth quarter of 2006, which was the first quarter of Alien's fiscal year. The most recent quarter came close to the record, and as a result, he says, Alien is on pace to double fiscal 2006 revenues for this year.

The strong sales have helped to stabilize the company's finances. Two other factors have also helped, according to Everhart. First, Alien has raised nearly two-thirds of the $50 million it said it would raise after the IPO didn't happen. And Everhart has cut the burn rate.

Alien reduced its staff from about 250 people to around 200. It has tightened up its supply chain to reduce costs, and it has introduced a new Higgs UHF EPC chip. Inlays based on the Higgs chip are cheaper than the previous version, Everhart says. As a result, Alien is no longer losing money on every inlay it sells.

Everhart has divided the RFID market into green, blue and red segments. Green segments are potentially profitable markets where Alien will spend marketing, research and development dollars to grow sales.

Blue segments are markets that are potentially profitable but are unlikely to yield a lot of revenue in the near term, and red segments are markets where it's just too early to invest in sales and marketing. (Of course, Alien will sell to customers in any segment if they approach the company.)

Alien plans to spend more money on marketing in the green segments. It will also continue to build its sales channel, which means enhancing its relationships with value-added resellers, systems integrators and label converters.

Everhart doesn't foresee the industry suddenly booming, with hockey-stick-like growth. But he sees good, solid growth quarter over quarter and year over year.

One thing he believes will help the market is Intel's introduction of a UHF reader chip set (see Intel Announces UHF Reader Radio Chip). The chip set incorporates a lot of the basic interrogator components, which allows interrogator manufacturers, such as Alien, to develop a range of interrogators, from simple sensors that talk to tags to high-end enterprise devices.

It also gives engineers and designers the opportunity to focus on innovations that can be added on top of the basic interrogator components, such as the ability to singulate tags better, do near-field and far-field reads, better define the boundaries of the read field and, perhaps, calculate the distance of a tag from the interrogator.

Looking back, Everhart says, it was probably beneficial to Alien that it didn't IPO. "One reason is the goal became to IPO, and the goal should be to build a great company," he says. "Alien will IPO one day, but it's not an end; it's an event in the life of a company. Another reason is when you are public, you have a big spotlight on everything you do and a lot of management time is taken up with filings and regulatory requirements. That time is often better spent on building the business."

According to Everheart, Alien wants to polish up its reputation, which he says was tarnished somewhat by the IPO debacle. However, he's not overly concerned about any lingering stigma.

"People need to understand that despite the failed IPO, we'll put our hardware and software against anybody's," he says. "Everyone in the company believes we can stand tall against any competitor."

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