Symbol Spends $230M on RFID

Enterprise wireless LAN player Symbol Technologies Inc. (NYSE: SBL) announced plans today to spend $230 million in cash to acquire Matrics Inc. for its radio frequency identification (RFID) technology, which helps companies track assets.

With the acquisition, Symbol is taking a step beyond the bar-code scanning asset tracking systems that originally helped to make the company's name. Matrics's RFID system uses a new-ish standard called Electronic Product Code (EPC) that allows companies to keep a lot more information about the items they tag and track than can bar-code systems. EPC systems also allow companies to collect basic data on where an asset is -- on the production line, in the warehouse, etc. -- when it is scanned or passes by static RF scanners installed in the workplace.

So how does this all work? The essence of EPC is a 96-bit code that allows users to store individual information about every individual product being tagged, rather than the generic information stored via 8-bit bar-codes. Companies hope that the new system will enable them to crack down more effectively on fraud and forgery while better managing the supply chain.

Combining the product data with radio tags should allow the companies to track individual items in an enterprise. A spokesman for Symbol says that the Matrics system uses RF triangulation -- measuring the signal strength emitted by the tags to calculate their location in relation to nearby scanners -- to plot where items are.

The plan, the spokesman says, is to feed this product tracking data into the firm's Mobility Services Suite (MSS) software, which is intended to provide detailed information on the status of corporate wireless networks and the devices and items logged on those networks and elsewhere in the enterprise (see Symbol Crashes In). [Ed. note: Ya see, it all fits together in the end.] The acquisition is expected to close in the third quarter of this year, pending regulatory approval. Matrics will become part of Symbol's RFID unit.

Symbol has opened up a new, short-term credit line to finance the acquisition and plans to "refinance the borrowings in a capital markets equity or equity-linked transaction later this year."

Because of the buyout, Symbol says it expects the dilution to its 2004 earnings per share of recurring operations of Matrics, including costs to finance the transaction, to be in the range of 5 to 6 cents a diluted share, excluding any accounting adjustments.

The firm is expecting this dilutive effect to diminish in 2005, subject to the RFID market taking off.

— Dan Jones, Site Editor, Unstrung

Be the first to post a comment regarding this story.
Sign In