Market Study Projects Global RFID Market to Reach $18.7 Billion by 2017

The technology used in Radio Frequency Identification (RFID) is not new, but global business continues to find additional lucrative applications for its use. Security and access control were among the initial drivers of RFID technology but now such applications as product security, inventory, production efficiency, shipping and importing, food safety, aviation and retail, just to name a few, are making use of RFID. A new market study by Global Industry Analysts has projected the world RFID market will hit $18.7 billion by 2017.

The small cap world is loaded with companies that use RFID technology as important parts of their business models.

RFID reader courtesy of Tootoo.com

Here are a few names, selected completely at random, that may be worth checking out. Remember: we are not recommending anything, but solely identifying some small companies that are publicly traded.

Israel-based B.O.S. Better Online Solutions (Nasdaq: BOSC, http://www.boscorporate.com), founded in 1990, provides an entire array of mobile and RFID solutions and supply chain solutions for enterprise logistics and organizational products. Its customer base is global but its market cap is tiny, only $2.95 million as of March 20. At mid-day March 26 BOSC stock was trading at $1.04, down 1 cent on the day, near the the bottom end of its 52-week range of $0.58-$3.67. If you’d like to learn more, tune in to the company’s fourth quarter and year-end conference call at 4 p.m. Israel time March 28.

Port Townsend, WA-based Intellicheck Mobilisa (AMEX: IDN, http://www.icmobile.com) provides commercial applications for reading and verification, government sales of defense security and identity card applications and develops wireless communications applications. Its products come in three areas: commercial identification, defense security and wireless applications. IDN bought Positive Access Corp. in August 2009. One product, IDv-Check, helps read and verify California and Canadian drivers’ licenses, among other things. At mid-day March 26 IDN stock was trading for $1.66, up 1 cent on the day, so far setting a new 52-week high. Low end of the range is $0.81.

Everett, WA-based Intermec (NYSE: IN, http://www.intermec.com) is a global business that designs, develops, integrates, sells and resells automated identification and data collection products and related services. Products include mobile computers, barcode scanners, printers, RFID products, among other things. On March 13, IN introduced two new desktop printers “perfect for space-constrained settings,” according to a press release. At mid-day March 26 IN stock was trading at $7.81, up 10 cents on the day. Its 52-week range is $5.87-$12.21 and its market cap is nearly $465 million.

Santa Ana, CA-based Identive Group * (Nasdaq: INVE, http://www.identive-group.com/) is a seller of physical and logical access control products, RFID products and identity management. CEO Ayman Ashour has built the company through acquisitions after coming over from HID Global, a division of Stockholm-based Assa Abloy, a major competitor. Identive is followed by several sellside research analysts.  At mid-day March 26 Identive was trading at $2.03, up 19 cents on the day. Its market cap is about $105 million and 52-week range is $1.37-$5.90.

* Denotes a client of Allen & Caron, publisher of this blog

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Salmonella, Melamine, Mad Cow: Do Food Chain Problems Offer Opportunities?

The latest food safety scare, in which nine people have so far died from salmonella linked to tainted peanut butter, may have received less attention from the general public that you’d expect due to the enormous coverage devoted to bank bailouts and stimulus packages. But it seems to have reached critical mass among members of Congress who are calling for new food safety regulations. That the peanut plant in question was not forced to disclose past violations to the FDA seems like it might be a heavyweight final straw on the proverbial camel. http://www.usatoday.com/money/industries/food/2009-02-11-peanut-food-reforms_N.htm

Since the Mad Cow scare of late 2003, the Agriculture department and the beef industry have tussled over a system that would trace tainted beef to its original source. A National Animal ID System has so far been voluntary; there are signs, however that the recent momentum for more food oversight could lead to mandatory changes.  If that happens, South St Paul, MN-based Digital Angel Corp (Nasdaq: DIGA, http://www.digitalangel.com) could see further adoption of its wide range of animal identification tags and growing RFID tracking systems. Some analysts note this latest food scare could provide a boon to RFID. http://computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=security&articleId=332796&taxonomyId=17&intsrc=kc_top

 The microbiology food testing market is expected to grow at a healthy 5.6% annual rate over the next few years. http://www.bccresearch.com/report/FOD011E.html.  Newark, DE-based Strategic Diagnostics (Nasdaq: SDIX, http://www.sdix.com/) provides a suite of diagnostic tests for seeds, grains, processed food and pathogens. Trading for $1 and near its low (down from $5.20), most of its upside remains ahead of it, should it receive more contracts as a result of new mandated testing.

 Lansing, MI-based Neogen (Nasdaq: NEOG, http://www.neogen.com/) labels itself  a “One Stop Shop For Food And Animal Safety Solutions.” In December it did something not seen often these days when it announced a new share repurchase program. The stock of this $383 million market cap company is trading at $26 – midway between its yearly low and high ($31.95).

 Rockville, MD-based Synutra (Nasdaq: SYUT, http://www.synutra.com/) rounds out the tainted food theme of this blog – but for a different reason. SYUT provides infant formula in China and it was one of the 22 producers whose products contained melamine, which was involved with infant deaths and hospital visits. The stock, at $8.65 mid-day 2-12, trades close to its 52-week low, down from a high of $52.24.  Investors who believe that China’s actions can bring back confidence to the infant formula market may want to take a look at this stock, which has distribution in 29 Chinese provinces.

RFID — TI Layoffs, Animal Tags Charge Ahead

In manufacturing news Tuesday, Dallas-based Texas Instruments (NYSE: TXN, http://www.ti.com ). one of the leading manufacturers of Radio Frequency Identification technology (RFID), announced that it would be eliminating 3,400 positions, but said that it is not withdrawing from the business.  TI will continue with its asset tracking, livestock and automotive sectors, and says that their customers will not feel the impact.  TXN shares closed yesterday at $16.02, just under half their 52-week high of $33.00.

Given their already-low share prices, that news didn’t seem to impact companies who are manufacturing RFID technology for use in livestock tracking.  And more than ever, there is an explosion of marketers and distributors offering RFID technology. However, it appears that not all cattleman share the same enthusiasm for incorporating the RFID technology into their programs, and the progression of a national system has slowed as technical and political issues have surfaced.

In 2003 Kansas State University (KSU) began conducting a cooperative project with the USDA Animal and Plant Health Inspection Service (APHIS, http://www.aphis.usda.gov/) to evaluate these technology issues and provide producers with an unbiased database of performance results for RFID manufacturers and their products.

One such manufacturer, South St .Paul-based Digital Angel (Nasdaq: DIGA,  http://www.digitalangel.com/), now offers ranchers and other producers of livestock a new tool for tracking locations of animals in real time with greater precision.  The Minneapolis Star-Tribune covered the product introduction this week: http://www.startribune.com/business/38719137.html?elr=KArks7PYDiaK7DUdcOy_nc:DKUiD3aPc:_Yyc:aUU

DIGA shares closed yesterday at $0.56, down from a 52-week high of $7.68. Current market cap is just under $9 million with an estimated 2008 revenue of about $78 million. Current estimates at http://www.thecattlesite.com and  http://www.thepigsite.com are for larger livestock herds and lower feedstock prices in 2009, both in the USA and Canada.

Digital Angel announced that their battery-powered animal ID tag, known as the “r.Tag,” can be read from 100 feet away, and allows more efficient, accurate livestock tracking than is presently available using other tags.  The contrast to previous tags is striking, because in order to read older tags, a reader had to be within inches of the animal, which meant that all animals had to be herded down an extremely narrow chute whenever they were to be counted.And even then animals could only be identified one at a time.  With the new r.Tags, animals can be recognized in groups a third of a football field away.  

The new battery-active tags are weatherproof, and each interrogator is powered by a small solar panel that charges an onboard battery so the reader can operate for up to two sunless weeks.

 Although APHIS does not require the use of RFID for tracking livestock, it does recommend the technology as a part of the National Animal ID System, a voluntary tracking system.

Other manufacturers using RFID technology to track livestock include Dallas-based Allflex (http://www.allflexusa.com) and Farnum Ztag Products (http://www.farnamlts.com/), both privately held companies.

Dale Blasi, who heads the KSU project, said that “there are good products out there, new products yet to be tested, and products that need to be removed from the supply chain.”

COOL Tags Help ID Meat Sources for Safe Eating

The meat industry has been moving from the past into the future on several fronts, not least of them ways to ID the country of origin with COOL labeling (County Of Origin Labeling), not unlike the COOL requirements for clothing, furs, toys, etc. Requirements for COOL IDs are a principal vector driving the RFID tags in today’s food herds.   http://www.drovers.com/news_editorial.asp?pgID=675&ed_id=5026

South St Paul-based Digital Angel Corp* (Nasdaq: DIGA) through its highly respected and longlived Destron-Fearing division is a main supplier of RFID chips and readers to cattle herds, fisheries, poultry farms, etc. 

This week and last we have seen several reports of dioxin in meat from Irish cattle — and we thought Mad Cow was the worst that could happen.  Do you know where YOUR dinner came from?  Have a look at http://www.digitalangelcorp.com and http://www.destronfearing.com.

Standard ear tag on calf -- picture from Destron Fearing.  RFID chips are implanted and not visible.

Standard ear tag on calf -- picture from Destron Fearing. RFID chips are implanted and not visible.

Cyber-Home on the Range

Cow with "Ear-a-Round" GPS device -- for tracking valuable assets, after all

Cow with

I grew up on a cattle ranch until I was about 12, so I know a bit about how cattle behave.  How they can’t figure out how to walk backwards, for instance, and so will starve to death if they put their heads through the fork in a tree to eat the leaves.  So when I read this story about a GPS system for cattle, it made me smile — hey, why didn’t someone think of that a long time ago? 

The lonesome cowboy with a guitar is not where the US Cattlemen Association has their gaze fixed right now — more like an up-to-date cowboy with a scanner.  http://www.uscattlemen.org/

http://money.cnn.com/2008/12/02/smallbusiness/cow_gps.fsb/index.htm

Not sure that the cattle industry is ready for this kind of fast-forward device, but the RFID approach of companies like Digital Angel (Nasdaq: DIGAD) are real-world, right-now steps in the right direction.  Very like the chips that are put into Spot (or Duke, or whatever the dog’s name is), these chips help track beef cattle from the range to the meatpacker.  Have a look while you munch on your hamburger.  http://www.digitalangel.com/