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Alien, One Year On

A year after the company suffered a failed initial public offering, sales are back up, the burn rate is down and the company appears to be back on track.
Posted By Mark Roberti, 01.25.2008
Shortly after Alien Technology pulled its plans for an initial public offering (IPO), I got a call from a guy at a major merchant bank. "Alien's not going to make it," he said. "I saw their books. At their current burn rate, they have enough cash to last three months. It's going to be a disaster for the RFID industry when they go under, including some of the companies my firm has invested in."

Well, Alien didn't go under after three months. Instead, the board brought in a new CEO, George Everhart, and provided some additional financing, and George put the company back on track. I recently caught up with Ronny A. Haraldsvik, who was brought in as Alien's VP of marketing and industry relations. Haraldsvik and I spoke about where Alien is now, where the market is and where both are headed. Here are excerpts from that discussion.

Roberti: How is Alien faring one year after the IPO was withdrawn?

Haraldsvik: A year ago, George came on board and put new management in place. He had to make sure we had a viable operation to scale and would have the longevity to grow with the industry, whether adoption was moving faster or slower. He took a holistic view of where the company was and decided to stay with its portfolio of chips, inlays, readers and services.

When I came on board in May, I resurrected marketing and the focus that the company had lost on product marketing and product management. We killed some R&D projects and graduated some others based on where the market was headed, and the feedback we were getting from our partner base.

Having the full suite of products—chips, inlays, readers and services—enabled us to work with partners who were able to bring RFID solutions to other industries and new applications. I've been flabbergasted by the use of RFID in segments I hadn't thought of. It's a good sign that the technology is maturing. We're now in the adoption phase, and we feel Alien is well positioned to benefit from that.

Roberti: We've had some ups and downs in the RFID industry. In your view, where is the RFID market right now?

Haraldsvik: The industry has gone through a tremendous transformation in the past year. It's getting back to where it was supposed to be. Clearly, we have seen more growth outside of the pure supply chain and compliance areas, even though our product offerings in those areas have been strong. We've seen strong growth in asset tracking and a renewed focus on item level.

But we need to be pragmatic about growth as an industry. We are not going to see hockey stick-like growth. We are seeing strong, steady growth. That is a solid sign that RFID is here to stay.

Roberti: How has Alien been able to turn things around?

Haraldsvik: We have focused on lowering the costs of readers and tags. We introduced some new price points and form factors, and we believe that for the next 12 to 18 months, the current solutions we have will serve the market well.

As a company, we feel good about our product offerings. We have cut a lot of fat and reduced our burn rate. That has allowed us to have some margin flexibility. Our partners are doing us a great service by selling into areas we are not focused on, but where our products are applicable. Two segments in particular that are taking off are transportation and pharmaceuticals—or what we call life sciences.

With the Sam's letter, compliance is back on the table as a growth area. We're coming full circle, with RFID adoption in the supply chain picking up again.

Roberti: Will you be announcing any new products at RFID Journal LIVE! 2008?

Haraldsvik: We have some big announcements planned, but nothing I can talk about right now.

Roberti: Where does the company stand financially?

Haraldsvik: Our focus has been on keeping expenses low and increasing revenue. The turnaround we've gone through is solid. We've enjoyed three record quarters in a row. Our first quarter for 2008 ended Dec. 31. It was the best quarter in the company's history, and we had the best product introduction ever with our new reader.

Our services business has doubled. That is a result of our Dayton Center and our Quatrotech subsidiary, which focuses on baggage handling. So we are in very good shape right now.

Roberti: Are there any plans to try to go public again?

Haraldsvik: That is not being discussed internally right now.

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