Oct 26, 2006This article was originally published by RFID Update.
October 26, 2006—RFID reader manufacturer Sirit announced last week at the EPCglobal conference in Los Angeles its plans to achieve cash flow neutrality by the fourth quarter of fiscal 2007. It will layoff over 25% of its staff, close two locations, and focus its product development efforts on those opportunities that promise near-term revenue.
The company has recently been through a period of heavy spending, as it integrated two acquired companies and invested in the development of key products. In February, the company bought TradeWind Technologies, a manufacturer of high frequency RFID readers that served the contactless payment, asset management, and closed-loop application markets, and in April it snapped up the assets of SAMSys, the struggling ultrahigh frequency RFID reader manufacturer that served the supply chain market (see RFID Reader Company SAMSys Sells Assets). The company says it will take a one-time $400,000 hit for expenses related to the layoffs and location closures.
"We are confident that these efforts along with continued revenue growth will enable us to reach our goal of cash flow neutrality by the end of 2007," commented chief financial officer Anastasia Chodarcewicz.
If Sirit attributed the trimming of its workforce to redundancy resulting from its two acquisitions, the news wouldn't be as sobering. Acquiring companies are often forced to let go people whose roles overlap with those of existing employees. But the company is pointing directly to the "current market outlook" as the reason for the headcount reduction. The company states explicitly that the supply chain market just isn't bearing fruit. "We have not seen indicators to suggest that the supply chain market will materially grow in the near term," said Chodarcewicz in the announcement.
Granted, Sirit was never one of the main RFID reader companies focused on supply chain. (Those would be Alien, AWID, Impinj, Intermec, Omron, Symbol, and ThingMagic.) Its focus has been RFID applications for parking, access control, and tolling, areas that the company characterizes as thriving. But presumably the acquisition of SAMSys' assets was a strategic move into the supply chain market. Even if the assets were bought on the cheap (SAMSys was actively looking for a company to buy it "in a timely manner" due to its dire financial straits), it is still disappointing to see such an investment effectively backburnered.
On a more positive note, the company announced the addition of Tony Sabetti as a vice president of sales. Sabetti was previously with Texas Instruments, where he was a widely-recognized public face and spokesperson for the RFID division. He was with TI for 21 years.
Read the official announcement from Sirit
