Identive to Restructure; Keeps NFC Products Intact
Identive Group, a secure ID and NFC tag and reader maker, has announced it will cut 11% of its global workforce as part of restructuring expected to save up to $5 million this year.
The company, however, said the cutbacks will not affect investments in NFC technology or “cloud-based” identity products, which it considers “hypergrowth markets.”
“We are being specific, our investment into NFC is not affected or impacted by the cost reduction program,” an Identive Group spokesman told NFC Times.
The cost-cutting measures will cut about 50 employees, out of Identive’s total workforce of at least 436.
Identive, based in both the U.S. and Germany, reported a net loss of just over $6 million for the first quarter, compared with a net loss of $1.9 million for the same period in 2011. Revenue for the quarter fell 5.3% to $21.2 million.
The company attributed the widening loss in part to orders drying up for readers for the German national electronic ID card program. The German government ordered about 700,000 contactless readers from Identive that hook to cardholder PCs. The readers enable citizens to authenticate themselves for services online, but there are few such services available.
Also, two large transponder customers delayed their orders, affecting results during the quarter.
Identive lost $9.5 million for all of 2011 on revenue of $102.7 million. It lost about the same amount in 2010.
As part of the restructuring, the company said it would also accelerate the elimination of duplication of expenses from its recently acquired companies and that executives and managers, along with board members, would take a combined $500,000 cut in salaries or fees temporarily.
The restructuring announcement late Thursday came a day after Identive’s share price on the Nasdaq exchange dipped below one US$1, down from a 12-month high of $2.54 last October.
“We believe our cost reduction program will enable us to preserve cash and reset our ongoing expense run rate to a more sustainable level,” Ayman S. Ashour, Identive’s chairman and CEO said in a statement. “This will not impact our ongoing investments in new NFC and cloud-based identity solutions or our ability to address opportunities in these emerging, potential hypergrowth markets.”
Identive Group, created by the acquisition of Bluehill ID by SCM Microsystems, is considered one of the top three NFC tag suppliers globally, producing the tags in its TagStar plant in Germany and Smartag in Singapore.
The company recently announced it would offer a “cloud-based” NFC tag-management system that would enable tag issuers, such as advertisers and retailers, to deliver customized content. Identive also recently announced a passive contactless sticker supporting MasterCard PayPass, called tomPAY.
The NFC products are part of Identive’s ID Product division, which includes PC readers for such projects as the German electronic ID and separate German electronic health card rollouts, as well as a recent contract to supply 266,000 smart card readers to a U.S. government agency to secure authentication and email encryption.
The company reported revenue for the ID Product segment rose 24% in 2011, to 46.2 million, in part on the strength of sales of RFID transponder inlays, tags and such applications as transit and event ticketing, NFC advertising and payment and secure asset tracking.
The unit had $8.5 million in sales during the first quarter of 2012, likely down because of the end of the supply contract for the German electronic ID project.