NYTimes.com Article: Symbol Technologies Buys Matrics, Accelerating Its Move Into Radio Tags

The article below from NYTimes.com has been sent to you by jellings(a)me.umn.edu. /--------- E-mail Sponsored by Fox Searchlight ------------\ GARDEN STATE: NOW PLAYING IN NY & LA - SELECT CITIES AUG 6 GARDEN STATE stars Zach Braff, Natalie Portman, Peter Sarsgaard and Ian Holm. NEWSWEEK's David Ansen says "Writer-Director Zach Braff has a genuine filmmaker's eye and is loaded with talent." Watch the teaser trailer that has all of America buzzing and talk back with Zach Braff on the Garden State Blog at: http://www.foxsearchlight.com/gardenstate/index_nyt.html \----------------------------------------------------------/ Symbol Technologies Buys Matrics, Accelerating Its Move Into Radio Tags July 28, 2004 By BARNABY J. FEDER Symbol Technologies, which has been burdened by the fallout from a long-running accounting fraud under previous management, tested the patience of its investors yesterday by announcing an acquisition that is likely to cut into earnings for the next two years at least. Symbol, the nation's leading producer of bar-code systems, said it would pay $230 million to acquire Matrics, a developer of electronic identification tags and wireless devices that read them. Analysts said that the deal should sharply accelerate Symbol's push into the promising field of radio-frequency identification, or RFID, but that Matrics and many other RFID pioneers still faced significant hurdles to becoming profitable. Radio-frequency identification has long been used to allow drivers to pay tolls wirelessly, and to track valuable assets like missiles, rail cars and cattle. Matrics is in the vanguard of a new form of the technology that is expected to sharply cut the costs of using it. As the newer technology matures, analysts expect billions of the tags to be attached to - or embedded in - goods that retailers, manufacturers and institutions like hospitals want to track. Purchasers of the technology will also need readers to collect the data, software to analyze it and in many cases consultants to put it all together. Symbol, which is based in Holtsville, N.Y., said it struck its deal with Matrics after 18 months of exploring radio-frequency identification and experiencing growing pressure from customers to expand its capabilities. "It's a huge step for Symbol," said Michael J. Liard, an analyst who follows RFID for the Venture Development Corporation, a market research company in Natick, Mass. "They're definitely a contender now." But in announcing the deal yesterday morning before trading began, Symbol, which had more than $1.5 billion in revenue last year, warned that the deal would slice 5 to 6 cents a share off its earnings this year and that accounting charges had not yet been determined. Symbol said that it expected a smaller dilution next year but that the drag on earnings would be depend on how fast the demand for RFID hardware, software and integration services grew. Investors sent Symbol's shares down more than 15 percent in heavy trading during the day before rallying to close down 10.5 percent at $12.48. William R. Nuti, Symbol's chairman and chief executive, brushed aside that reaction, citing the generally supportive assessment of analysts. "If you take a long-term view, you'd be very bullish," Mr. Nuti said. Matrics, a privately held company based in Rockville, Md., with 64 employees, was founded five years ago by William Bandy and Michael Arneson, former wireless computing researchers at the National Security Agency. It is a leading designer of wireless tag and reader systems in which the reader's scanning signal provides the power needed for the tag to send a return signal identifying itself. The technology, which is known as passive RFID, has been embraced by Wal-Mart Stores and the Pentagon to track a wide range of goods they receive from suppliers. That in turn is forcing nearly every major manufacturer to get involved and raising alarm among privacy advocates. Passive RFID has the potential to be substantially cheaper and more compact than active RFID systems like those used in automatic toll collection because the tags do not need batteries. But, like active RFID, it can provide far more data than bar codes and much faster data gathering. The deal, which is expected to close by the end of September, would be Symbol's largest acquisition under Mr. Nuti, who was recruited two years ago from Cisco Systems to help the company recover from an accounting scandal that turned out to be much deeper than he had anticipated. Last month, Symbol agreed to pay $138 million in penalties and compensation to settle both private class-action lawsuits and a complaint brought by the Securities and Exchange Commission. http://www.nytimes.com/2004/07/28/technology/28scan.html?ex=1092045711&… --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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