Motorola Could Sell Symbol’s RFID Tag Business

By Admin

There is an industry rumor that Motorola, which recently acquired Symbol Technologies for $3.9 billion, is considering a sale of the RFID tag component of Symbol's RFID business. RFID Update spoke with Reik Read, leading RFID industry financial analyst and author of , about Motorola's possible divestiture.

image_pdfimage_print

This article was originally published by RFID Update.

January 24, 2007—In January’s RFID Monthly report from investment firm Baird, there was mention of an industry rumor that Motorola, which recently acquired Symbol Technologies for $3.9 billion, is considering a sale of the RFID tag component of Symbol’s RFID business. “We are told by an industry contact that Symbol (Motorola) is looking to sell its RFID supplies (tag) business,” it read. RFID Update spoke with Reik Read, leading RFID industry financial analyst and author of RFID Monthly, about Motorola’s possible divestiture.

According to Read, the sale of the RFID tags business might occur not because it is inherently undesirable but because the production and selling of RFID tags is not a business that leverages Motorola’s long-term focus on the enterprise mobile computing market. “My own view is that at some point Motorola would look to sell the tag business,” said Read. “The tag business is a little bit of a different operating model than readers. The RFID reader business fits in very well with Motorola’s R&D capability, with its sales capability, and with its distribution channels. With tags, it might not be as core to their business.”

When asked if it is possible that Motorola would sell the Symbol tag business as well as the reader business to get out of RFID altogether, Read responded, “No, I don’t think that would make any sense at all. Being in the reader business makes complete sense to me.” He continued, “Motorola does have an interest in RFID. I’d be very surprised if they went out of the RFID business.”

Motorola itself would not comment to RFID Update one way or the other, responding only that “Motorola policy is not to comment on rumors or speculation.”

Were Motorola to sell the tag business, likely acquirers would include the large label converting companies. Symbol’s tag business would be highly complementary to such a company, which already has the distribution and sales infrastructure in place to move tags.

Read pointed out that Symbol has focused less on price point with its tags and more on adding value for particular niches, like baggage tagging. “One of the strong points of Symbol’s tag business is that they don’t want to be a commodity player,” he said. Thus a potential acquirer of the business would likely espouse a similar strategy of selling value-added — rather than lowest-cost — tags.

Presumably because the numbers are relatively low, Symbol does not break out much detail on the value of its RFID business, let alone more granular information about reader sales versus tag sales. It is therefore difficult to predict an acquisition price for the tag business or how big a chunk of Motorola/Symbol’s overall RFID business it represents. Read’s estimate was that readers comprise 65 to 70 percent of the RFID hardware revenues, meaning tags are a considerably smaller business for the company.