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Symbolic Upheaval

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor
2/23/2006

Can yet more management changes at mobile vendor Symbol Technologies Inc. (NYSE: SBL) help turn the firm around after the financial scandal that has cast a long shadow over its fortunes?

Industry analysts say so, but some warn that the company still faces a couple rough quarters before it gets on track.

Symbol said yesterday that its fourth-quarter net income slipped to $23.9 million, compared to $28.5 million a year earlier. Revenue fell to $438.9 million from $450.5 million. The company's quarter was affected by weak demand in the retail sector that has traditionally been its bread and butter.

On the back of these results, the company's recently appointed CEO, Sal Iannuzzi, unveiled a number of changes at the top: Boris Melitsky will take over as SVP of the global products group; Ray Martino Jr. becomes VP and CTO; and Anthony Bartolo becomes VP and general manager of the RFID division, from which Symbol expects much of its future growth.

Symbol says that searches for a new CFO and general counsel are also underway.

And it's just the latest round of management shocks and shakeups Symbol and its customers have endured in the last three years. In August 2005, CEO Bill Nutti announced that he was resigning to move to NCR Corp. and Iannuzzi took over as interim CEO. (See What Now for Symbol?)

Nutti took over the reigns at the end of 2003 after his predecessor, Richard Bravman, resigned because of a government investigation into Symbol's revenue statements. The company's former chief accounting officer, Robert Korkuc, and former sales finance executive, Robert Asti, both pleaded guilty to federal charges that they had plotted to inflate Symbol's earnings figures. (See Symbol CEO Falls on Sword.)

Rob Enderle, principal analyst at the Enderle Group, thinks that Symbol is moving past its recent trouble, albeit fairly slowly.

"As far as I can tell, they've put it behind them," says Enderle. "But it does take awhile to recover from this kind of a problem, and it does make customers very nervous."

Still, analysts think the company's fortunes will start to improve, since it maintains a strong position in the enterprise mobility market and has solid partnerships with firms like IBM Corp. (NYSE: IBM)

"I actually think things are starting to look up for Symbol even though their results don’t really show that yet," says Enderle.

"I think they will do just fine," concurs Craig Mathias, principal at the Farpoint Group . "I will concede, though, that the next two quarters are likely to be rocky." Enderle adds that the firm may be wise not to bet too much on RFID location tracking technology just yet. Symbol has been talking up this technology for some time now and spent $230 million on startup Matrics last July. (See Symbol Spends $230M on RFID.)

"RFID isn’t picking up as quickly as many hoped either, and Symbol has bet much of their future on this technology," Enderle notes. "I still think RFID may be the big long-term play for them. But yes, I think I’d come up with a much stronger plan B so that if RFID continues to lag expectations I have a backup plan."

— Dan Jones, Site Editor, Unstrung

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