Alien's IPO Documents Shed Perhaps Too Much RFID Light

Few companies have come to represent the RFID space?warts and all?so clearly as has Alien Technology. So when it announced plans to seek an IPO, it was Wall Street's first big shot at evaluating the RFID market.

Alien's S-1 SEC filing?which, in case you don't like navigating SEC's Edgar database, we've a provided a copy of here--delivers few surprises beyond the required candid lawsuit-avoiding language so popular in SEC filings. Still, Alien statements such as "Both we and other industry participants have overestimated RFID market size and overall growth rates" are noteworthy. Is Alien's IPO a test of the whole RFID market?

What the IPO makes clear is that Alien has never been profitable. "We incurred net losses of $19.1 million, $27.6 million and $53.0 million in fiscal 2003, fiscal 2004 and fiscal 2005, respectively, and $17.9 million in the three months ended December 31, 2005," the statement said. "Net loss allocable to common stockholders was $44.5 million, $27.6 million and $53.0 million in fiscal 2003, fiscal 2004 and fiscal 2005, respectively. As of December 31, 2005, we had an accumulated deficit of $201.2 million."

That's fine, but no really believed that a pureplay RFID player would be a cashcow in 2005. But conceding that Alien's own execs had overestimated RFID market size and growth rates.

Then comes the kicker: "To date, we have had limited success in accurately predicting future sales of our RFID products generally and our RFID tag products in particular. We expect that our visibility into future sales of our products, including both sales volumes and prices, will continue to be limited for the foreseeable future. "

Is that like my saying that I've had limited success in making billions of dollars as the world's ugliest male model? That is suddenly my favorite new phrase. When my wife asks me if I've finished cleaning the kitchen, I'll tell her that I'm enjoying limited success in that endeavor.

Comments that were E-mailed around from analyst firm VDC were on-target. ""While publishing these statements are understandable from a risk perspective, they unfortunately do not bolster the confidence of would be investors," a VDC E-mail said.