RFID vendor Alien Technology (Morgan Hill, CA) has withdrawn its recently filed registration statement for an initial public offering of approximately $120 million worth of common stock.
An Alien spokesperson told Managing Automation that the company decided to abandon its IPO filed in April because of the "widely reported" depressed market for new securities offerings across all industries. Instead, the company will seek additional private funding. The spokesperson declined to be more specific, citing a 30-day quiet period prescribed by the Securities and Exchange Commission.
Alien's revised financing path, she added, will not affect the RFID reader and tag maker's plans for product-related announcements scheduled for later in the year. It will, however, necessitate some belt tightening.
"While we are evaluating the options for our future financing needs, we are taking prudent cost-reduction actions to continue to effectively manage and grow our business and support our customers going forward," Alien CEO Stav Prodromou said in a prepared statement.
The offering was to be managed by Bear, Stearns & Co. Inc., Cowen & Company, Robert W. Baird & Co., and Advanced Equities, Inc.
Alien last raised capital in July of 2005 when it received a cash infusion of $66 million in a so-called "Series H" funding round led by SunBridge Partners. At the time, Alien said the funds would provide the company with capital to continue its expansion and drive new market opportunities in the face of "accelerating global demand for RFID technology."
Joining SunBridge Partners were existing Alien investors Advanced Equities, Digital Bandwidth, Equitek Capital, Lago Ventures, and Miami Valley Venture Fund. The H round brought Alien's total funding to $200 million since the company was formed in 1996.
According to Jeff Woods, industry analyst with Gartner Inc. (Stamford, CT), while the budding RFID hardware market is very promising and attractive to investors, the "lifetime value" of a vendor's existing customers is still largely unknown, which makes it hard to place a valuation on these companies. Woods said that while the IPO withdrawal puts Alien in the "awkward" position of having exposed its financial information without reaping the benefits of the additional funds and stature that attend a publicly listed company, he said the fact that the company filed the IPO in the first place is a good sign for the overall RFID market because it signals the presence of legitimate investor interest.
Woods added that the RFID market in general is on a 40% to 45% annual growth track. According to research released last week by ABI Research (Oyster Bay, NY), the global market for RFID readers and reader modules grew to more than 35,500 unit shipments in 2005, and reader unit volumes grew nearly 14% in the first quarter of 2006 compared to the like period in 2005.
The IPO withdrawal comes at a tough time for Alien, as the company is defending itself against a patent infringement suit filed by Intermec Technologies Corp.