RFID company Alien wants to be valued at half a billion -- despite growing red ink
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RFID stands for Radio Frequency Identification.
This is a company whose only business distinction so far has been to log declining sales, and widening losses. The company lost $18 million in the most recent quarter (see page 8 of its prospectus). It loses money on every sale.
Thomas Weisel and Bear, Stearns, two of the banks that are underwriting this IPO, have serious cahones. They were also part of the syndicate which took Vonage public recently, a stock that has only fallen. But it was an IPO nonetheless, and the bankers got paid (to the tune of $32 million).
Alien wants to sell 9 million shares, with an estimated price range between $10 and $12 a share, according to its filing. Counting its total shares outstanding, that puts its implied valuation at around $500 million.
See our previous post on Alien here.
The company has received $266.4 million from players like Advanced Equities Inc (AEI), Sevin Rosen Funds, and New Enterprise Associates.
AEI is an interesting player in this IPO. You'll see that it is an underwriter of the IPO (see second page of the prospectus), but it is also the largest shareholder (16.7 percent), as you'll see in description of the rather conflicted relationship on pages 101-105.
http://www.siliconbeat.com/cgi-bin/mt331/mt-tb.cgi/1595
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I think most people probably understand this without having to have it explained to them but, for those that don't, "cohones" is the phonetic spelling of "cojones"
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I think the VC's want to collect, there $200M investment ASAP. They realize in EPC G2 Passive Tag market there is no money to be made which Alien is betting on, as a passive tag costs about 35 cents to build where as endusers such as P&G are willing to pay for it only 5 cents, also market is not getting the traction of billions or millions of tags yet, as customers are not able to realize ROI of this technology. On top of all this loss business, there are entrenched competitiors such as TI, Philips, and ST who own there own fabs and testing facility were they can backfill this product with high end DSP, MCU custom ASICs. Only IP Alien seem to have is FSA (Fluidic Self Assembly) which is used for packaging. So with all these barriers this is diffcult sell,of $500M in IPO.
RK on July 14, 2006 1:21 PMComment link
Alien has continued to loss market share and they are to far underwater to rightup the ship. If Alien would have focused on working with their strategic partners and not sell direct to the clients they would have had a chance to control the price but that is too late. Alien should be considered a Junk Bond.
MJ on July 15, 2006 8:04 AMComment link
Let's just wait and see what happens in their legal battle with Intermec whose massive RFID-IP portfolio could further reduce revenues for this flailingly unfocused company. Philips licensed the FSA technology for possible use display technology, maybe Alien could pursue that market?
RNC on July 17, 2006 7:17 AMComment link
Check out Alien's past (where did the first $100M go??)......I think they started in the display market.....it seems like they never made a go of it (wonder why????????) - but maybe I missed something.
IMHO, this dog can't hunt.....but there are a lot of suckers out there looking to give their $$$ away.
Also....look hard......is FSA really being used? Great concept........so is cold fusion.
JRT on July 17, 2006 9:57 AMComment link
As a former employee, FSA is tried and true. First use was displays, but there was little market and lots of technical difficulty. RFID was a better match to FSA. It can be done!
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