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   Technology StocksRFID, NFC and QR code Technologies


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From: Ahda7/31/2014 8:31:39 PM
   of 1712
 
Would this tech include Zebra?

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To: Ahda who wrote (1642)7/31/2014 8:40:10 PM
From: Glenn Petersen
   of 1712
 
Yes.

"Zebra's tracking technology will help teams to evolve training, scouting and evaluation through increased knowledge of player performance, as well as provide ways for our teams and partners to enhance the fan experience," says NFL VP of Media Strategy Vishal Shah.

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From: Glenn Petersen8/28/2014 10:43:45 AM
   of 1712
 
Our Sources Say the Next iPhone Will Include NFC Mobile Payments

By Christina Bonnington
Wired
08.28.14, 6:30 am

Platforms like Google Wallet, Isis, and Square have been around for years, while Apple has remained curiously silent on the mobile payments front. Well not anymore.

The company’s next iPhone will feature its own payment platform, sources familiar with the matter told WIRED. In fact, that platform will be one of the hallmark features of the device when it’s unveiled on September 9. We’re told the solution will involve NFC.

Apple is in the perfect position to launch its own mobile wallet. The Cupertino company has a vast trove of credit cards already on file thanks to iTunes (over 800 million, in fact), and a huge pool of potential users, thanks to the millions of iOS devices out there. And mounting evidence has indicated that the company is investing in such an endeavor.

Over the years, the company has filed a number of patents relating to an e-wallet platform. One, published this past January, detailed how dual wireless protocols like NFC and Bluetooth could be paired to complete a transaction while sensitive data is stored in a “secure element” in the device’s hardware. Another patent describes a payment system that’s location and context aware, offering the user various options (like rewards cards or coupons) when relevant.

On the business side, The Information previously reported that conversations between Apple and payment companies have heated up in recent months and that Apple’s solution will incorporate a “so-called secure element” in the phone where sensitive financial information would be stored. Apple has also made hires relating to “building a business around the hundreds of millions of credit cards it already has on file.”

While Apple’s exact implementation is still unclear at this point, we can still make some general idea of what it will look like. The company has made a huge push to get its Bluetooth LE-transmitting iBeacons into retailers across the country. And because Apple did not spend a great deal of time expounding on iBeacons at WWDC this year, it’s possible they could be a greater focus at Apple’s September media event—as a part of its mobile payment solution. Touch ID will also likely play a role in securing the platform, and it could make sense for Passbook, Apple’s hub for tickets and coupons, to get some level of integration with the service too. We’ll find out more on September 9th.

wired.com

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From: Glenn Petersen9/14/2014 5:08:54 PM
2 Recommendations   of 1712
 
Long overdue:

New York City Adopts RFID Tags to Track First Responders

By: Amanda Vicinanzo, Contributing Editor
Homeland Security Today
09/13/2014 ( 4:38pm)

With the tragic events of September 11, 2001 in mind, the New York City Fire Department (FDNY) has achieved great success implementing a new technology using radio identification to coordinate its 14,000 firefighters and emergency responders.

"The events of 9-11-2001 revealed that FDNY did not have a reliable method to account for all members responding to an incident,” said FDNY Deputy Assistant Chief Edward Baggott in a statement.

In response, David DeRieux of the US Naval Research Laboratory (NRL) Space Systems—the Navy’s corporate laboratory—and Michael Manning of Manning RF, partnered with FDNY to invent a system to track firefighters who may be in danger through an active radio frequency identifier (RFID) tag carried by each firefighter.



"It's in a little sealed plastic—it looks like a little key fob, actually," said George Arthur, an NRL engineer who contributed to the project, in a press release. "They're positioned over the left breast, inside the bunker coat in a little Kevlar pocket that's sewn in there. And it just sends out a little ping every five seconds: here I am, here I am, here I am."

A radio receiver located in each of the response vehicles picks up on the pings and builds a table of identifiers. A program running on the mobile data terminal in the vehicle periodically quizzes the user on the information and then relays that information to the FDNY Operations Center in Brooklyn where a commercial modem projects the data onto a wall-sized display and archives the data.

“As soon as [the driver] turns the ignition on, this thing comes up,” DeRieux said. “When they get on the scene, everyone takes off, they all disappear. Then eventually they come back for a roll call situation, and the captain can tell instantly everyone is within so many feet of the truck.”

In developing the firefighter tracker system, the NRL worked closely with FDNY to garner feedback on the operational efficiency of the new system. The origin of the idea for the tracking system occurred through a chance meeting in 2002 when DeRieux recognized FDNY Battalion Chief Joe Pfiefer, the first chief to take command on 9/11.

"[Pfiefer] brings me into his office and he says, 'We've got a problem. We need a way to keep track of our firefighters. Worse yet, some firefighters, who become dazed and confused during an operation, may not make it out of the building, or they end up in the wrong area for roll call,” said DeRieux.

According to Arthur, FDNY requested a system that is “easy to use, reliable and cheap.” DeRieux turned to Manning, whose company already worked on RFID, for off-the-shelf hardware to keep costs low.

“The readers cost around $1,100 a piece in the quantities we buy them — that might come down a bit," Arthur said. "The tags cost about $20 a piece.”

Prior to the new system, each firefighter kept a paper “riding list” of personnel in his or her pocket and left a copy of the list in the vehicle when responding to an incident. However, September 11, 2001 demonstrated the need to keep an off-site record of personnel.

Arthur said NRL’s next step is to develop indoor tracking to track firefighters moving inside a building. "We have given them the piece that lets them track from the vehicle to the fire ground or the event," Arthur said. "If we could drop in a complementary piece, where we could track firefighters while they're in the building, which would save so many lives."

Earlier this year, the Federal Laboratory Consortium for Technology Transfer (FLC) recognized NRL with its Excellence in Technology Transfer award for developing the firefighter tracking system and meeting a direct need at FDNY: the ability to know who is on the scene, where they are and whether they are safe.

“The active-RFID tracking system developed by the committed team at NRL is a stellar example of the ways technology transfer returns vitally important benefits to the nation,” said Dr. Rita Manak, NRL Office of Research and Technology Applications representative, in the FLC Awards 2014 publication. “It’s what we are here for; exactly this kind of collaboration. In this case, between a city that really understood the problem and had real-life experience and need, and our highly skilled and motivated technical staff.”

hstoday.us

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From: Glenn Petersen10/8/2014 5:56:58 PM
   of 1712
 
Food Tech Startup Pantry Labs Taps RFID for Smart Vending Machine

Martin LaMonica
Xconomy
10/7/14

Anybody who has searched for dinner in a vending machine at work or in a hospital knows how unappealing the typical choices of candy bars and snack foods can be. Using hyped-then-forgotten RFID technology, Pantry Labs has developed a smart refrigerator that makes fresh food available to consumers who can’t get to a restaurant or store.There are dozens of food delivery startups but Pantry Labs has a slightly different take on food and convenience. Its refrigerator is designed to give cafeterias in hospitals, corporate campuses, and universities a way to offer fresh food, whether it’s salads or sushi, in off hours.

“The idea is to be able to sell food unattended at locations where people live and work—to bring fresh food closer to the people,” says co-founder and vice president of engineering Tony Chen. In its first installations, the company found that the busiest times are between 8 PM and 6 AM at hospitals, hours during which cafeterias are closed. The company, which has raised $1.3 million and went through the Lemnos Labs hardware incubator, now has customers in the Bay Area and is looking to expand into other regions, Chen says.

Pantry Labs’ refrigerator is equipped with a tablet and a credit card reader on the front. After the consumer swipes a card, the door opens so the person can take an item out. Once the food is removed, it automatically debits the credit card. The cafeteria can also remotely check on what’s been sold.

The enabling technology is an RFID reader embedded inside Pantry Labs’s hardware. It’s made by Woburn, MA-based ThingMagic, a company founded by MIT grads, which was bought in 2010 by navigation company Trimble.

About ten years ago, many people thought that RFID technology would enable the Internet of things. Initially, the killer app for RFID was in tracking goods moving through the supply chain: the idea was that palettes could be monitored to deliver better data on where goods are and avoid theft. But after some large companies, including WalMart, scrapped their projects, the industry came to a crashing halt, says ThingMagic vice president of business development Bernd Schoner.

The technology hasn’t completely gone away. In fact, analysts project that billions of dollars worth of RFID tags will be shipped this year. Retail has emerged as one of the most active areas, says Schoner. Sales people scan shelves or racks at the end of the day to see what items, such as clothes, have sold.

But now that much of the tech industry is focused on connecting everyday devices, whether it’s thermostats or food in refrigerators, RFID could pick up again, at least for some uses. Items that have an RFID tag on them can only report their status once they are within a few meters of an RFID reader. By contrast, an item that has a battery-powered WiFi or Zigbee wireless chip embedded can communicate directly to the Internet or a central hub, such as WiFi router.

But adding a wireless card, which needs a power source, to low-cost items makes no sense. That’s why Schoner believes that RFID will see more interest. “Smaller, cheaper objects will probably end up using RFID because it means objects don’t need to be powered and you can afford to put an active tag on them,” he says.

In the case of Pantry Labs, it chose RFID because it’s relatively cheap—the tags that go on food only cost 15 cents. Chen sees the company as part of a wave of Silicon Valley companies trying to marry technology and food. “The vending machine industry hasn’t had any innovation in dozens of years. It’s time to disrupt this industry,” he says.

Martin LaMonica is a national correspondent for Xconomy covering energy and technology. You can reach him at mlamonica@xconomy.com or @mlamonica.

xconomy.com

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From: Glenn Petersen10/9/2014 7:17:42 PM
   of 1712
 
Alien Technology raises $35M to make RFID tags for the Internet of things

Dean Takahashi
VentureBeat
October 9, 2014 5:00 AM

Alien Technology has raised $35 million in a new round of funding to expand productino of its radio frequency identification (RFID) tags and readers, which enable the Internet of things. The chip maker has also named Chris Chang as its new chief executive.

An RFID tag is like a super bar code with radio connectivity. RFID readers can wirelessly detect and track RFID-tagged products in the supply chain. RFID readers, tags, and chips provide an identification system that can track huge numbers of things, such as products in a supply chain or sensors in an oil refinery.

Alien raised a bunch of money in its previous life when it tried to manufacture its own chips — which were smaller than a pinhead — using a cool assembly system, dubbed “ fluidic self-assembly,” developed by John Smith, a professor at the University of California at Berkeley, who founded Alien in 1994. As RFID infrastructure took shape in the supply chain, Alien pioneered many of the industry’s standards. And it tried to go public. The company sought to raise $120 million in 2006, but it later withdrew its initial public offering plans as market conditions turned sour.

Chang, a former executive at Marvell, told VentureBeat that the older technology was expensive and the volumes never reached levels that justified the company’s big manufacturing facility in Morgan Hill, Calif., in the far south of Silicon Valley. Alien shut that down and started using more traditional manufacturing partners.

Alien changed CEOs a couple of times and survived that crisis. It now has fewer than 100 employees, compared to more than 230 in 2010.

Chang said that the company is going through a revival now as actual orders for RFID tags and readers materialize. The resurgence has come with the popularity of the Internet of things — the vision of connecting billions of everyday objects to the Internet.

That has enabled Alien to attract new interest and investors. The newest investor is Shanghai Ruizhang Investment Co. Existing investors are also participating in the round. The new funding will allow the company to accelerate its development of new technologies
.

“The market hit bottom a couple of years ago, but it’s really good timing to talk about RFID again,” Chang said. “We are seeing UHF RFID applied in many industries, and users are seeing payback from investments. We’re entering an era of steady and high growth. This is what the management team and investors believe.”

“The Internet of things offers a huge chance for wealth creation. RFID gives identity to things, and so it is a natural part of the Internet of things. I see this as really good timing,” he said.

Alien is focused on readers, tags, and chips. Chang said the company wants to get the No. 1 market share on a global basis.

“The markets are maturing,” Chang said. “Everyone is now talking about IoT, and the end users are really seeing the benefits.”

“Alien was a key, founding father of the passive RFID Industry, authoring the Gen 1 Class 1 standard and serving as a key driver of the current Gen 2 standard. Alien is the only company in the industry that designs its own IC, Inlays, and Readers, and the company has been instrumental in the recent retail item-level adoption expansion,” said Ann Grackin of ChainLink Research, in a statement. “We expect the UHF market to grow over 28 percent a year over the next five years. The market needs laser focus and innovations that a company such as Alien can bring to the volume RFID market. With this kind of funding, explosive market adoption is suddenly within reach.”



Above: Alien Technology RFID Higgs 3 chip.

Image Credit: Alien Technology

venturebeat.com

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From: Glenn Petersen10/25/2014 4:54:07 PM
   of 1712
 
Let the NFC wars begin:

CVS Stores Reportedly Disabling NFC to Shut Down Apple Pay and Google Wallet

by Eric Slivka
MacRumors
Saturday October 25, 2014 7:56 am PDT



Earlier this week, pharmacy chain Rite Aid shut down unofficial support for the Apple Pay and Google Wallet mobile payments systems, resulting in an outcry from users who have been testing out Apple's new system since its launch on Monday. Rite Aid was not an official Apple Pay partner, but the payments system generally works with existing near field communications (NFC) payment terminals anyway, and many users had had success using Apple Pay at Rite Aid stores early in the week.

It now appears that fellow major pharmacy chain CVS is following suit and as of today is shutting down the NFC functionality of its payment terminals entirely, a move presumably intended to thwart Apple Pay. Google Wallet services are obviously also being affected by the move.

Multiple reports on Twitter and the MacRumors forums have indicated that CVS has sent an email to its stores indicating that NFC support is to be turned off. It is still relatively early in the day in the U.S., but we are now starting to see reports of NFC indeed being turned off at CVS stores.

The reason behind Rite Aid's and CVS's moves to disable unofficial Apple Pay support in their stores is presumably related to their participation in Merchant Customer Exchange (MCX), a retailer group developing its own mobile payments system known as CurrentC. A claimed internal Rite Aid message shared with SlashGear supports this notion, instructing cashiers to explain to customers that Apple Pay is not supported but that MCX's solution will be available next year.



Rite Aid internal memo regarding Apple Pay
_________________

Rite Aid's and CVS's moves are also in stark contrast to competitor Walgreens, which has fully embraced Apple Pay and is one of Apple's launch partners for the service. With over 8,000 stores around the United States, Walgreens has been one of the most popular locations for those testing out Apple Pay over the first week of availability.

macrumors.com

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To: Glenn Petersen who wrote (1648)10/25/2014 5:34:09 PM
From: Glenn Petersen
   of 1712
 
The MCX (CurrencyC) solution does not employ NFC capabilities. It does, however, have an impressive group of backers.

Eye on Branding: As Wallets Struggle, MCX Dubs Its Scheme CurrentC While Isis Says It Is Now Softcard

By Kevin Woodward
Digital Transactions
September 3, 2014



Image Credit: MCX

The logo for the yet-to-be-released CurrentC mobile payment app.
________________

The Merchant Customer Exchange, a retailer-controlled mobile payment scheme, has given its service a name. Dubbed CurrentC, the service will not be available outside of testing until 2015.

First announced in 2012, the long-gestating scheme aims to give participating retailers their own mobile-wallet service that eschews the traditional payment networks in an effort to lower payment costs.

When at full scale, more than 110,000 merchant locations will accept CurrentC, MCX says in a press release.
Participating retailers, according to the MCX Web site, include Walmart Stores Inc., Target Corp., Southwest Airlines Co., 7-Eleven Inc., convenience store chain Wawa Inc., and regional grocer Hy-Vee Inc.

MCX declined to comment about CurrentC beyond its press release. The Needham, Mass.-based organization says the wallet will be enabled for smart phones using Apple Inc.’s iOS and Google Inc.’s Android operating systems. The service relies on bar-code scanning to complete a transaction.

In addition to a payments function, the app also will store and automatically apply offers and track a consumer’s loyalty program participation.

CurrentC transactions will be secured with a token that is used in lieu of sending cardholder data each time, MCX says. The app will use a bar code unique to a particular transaction and will not require additional hardware from most consumers or merchants, it says.

The significance of the MCX announcement—especially in light of the scant details and a suspected announcement from Apple next week that it may introduce a mobile-payment service—can be read a couple of different ways.

“It’s a reminder that they’re still there,” says Mary Monahan, executive vice president and research director for mobile at Pleasanton, Calif.-based Javelin Strategy & Research. “We’re at the table.”

That’s important because it is rumored Apple will work within the existing payments infrastructure. Merchants are part of the traditional payments system, Monahan says. “And if Apple goes with near-field communication, which is the rumor, they want to remind everyone they could go QR code and not turn on the NFC terminals,” Monahan says. “Apple needs [merchants’] cooperation.”

There are about 800 million iTunes accounts under Apple’s purview. Speculation is rampant that those accounts could be enabled in a mobile-payment scheme supported by an iPhone with an NFC chip. An Apple product announcement is scheduled for Tuesday, but Apple has not disclosed the subject of it.

The CurrentC announcement, even without details, is significant, says consultant Steve Mott of Stamford, Conn.-based BetterBuyDesign. The testing going on now is with actual transactions at merchant locations, an expansion from activity earlier this year. CurrentC also is using tokenization technology from Paydiant Inc., which is providing the mobile wallet technology. And, it provides a preview of the benefit/value proposition with a larger focus on marketing than on payments, Mott says.

“Taken together, these steps verify the sustaining nature of this effort, which has already changed the conversation over how payments should be done in the future,” Mott says. “This announcement underscores the reality of an alternative to the legacy payments system approaches to transacting—EMV, EMV tokens, NFC, PCI, and associated constraints on how merchants and consumers can interact and market together.”

CurrentC, given the lack of major card brands as partners, presents an opportunity for MCX to disrupt mobile payments, says James Wester, practice director for worldwide payment strategies at Framingham, Mass.-based research firm IDC Financial Insights.

The MCX announcement may be a pre-emptive move against the anticipated Apple one, Wester says. “What may be counterintuitive with all of the delayed or underperforming mobile-wallet products to date is that the high expectations for Apple’s mobile-payment plans may be completely uncalled for,” he says. “Why do we assume Apple has special insight into making a mobile-payment product? Perhaps they do, but if they succeed a rising tide lifts all boats.”

CurrentC is well-positioned to drive adoption, says Beth Robertson, principal at Robertson Payment Services LLC, an advisory firm, but two challenges await.

“One is the concern generated by various merchant data breaches may bleed into related concerns that CurrentC offers adequate security protections and liability coverage for users,” Robertson says. “Second is access to the device that options like [Isis] or Apple offer; this may be a hurdle for CurrentC, although not an insurmountable one.”

“Right now, point solutions and trials are viable, but the key to success will be building ubiquity of access, and this may be a challenge for a merchant-driven option,” Robertson says.

In related mobile-payment news, Isis, the mobile-payment scheme backed by AT&T Inc., Verizon Wireless, and T-Mobile USA, has changed its name to Softcard. The new name and logo soon will festoon the enterprise’s Web site and mobile app. Isis said it would rebrand to disassociate itself from the Islamic militant group in the Middle East.

The rebranding will be fraught with obstacles, observers says.

“It’ll be tough to take all of that branding and start over,” Monahan says. “They poured a lot of money into [Isis] and now they have to start from ground zero.”

digitaltransactions.net

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From: Glenn Petersen12/9/2014 3:41:33 AM
   of 1712
 
The Next Challenge for the RFID Industry: Rapid Growth

The technology adoption life cycle isn't a smooth upward curve, and that will present problems for users and providers of RFID technologies.

By Mark Roberti
RFID Journal

Dec 08, 2014—The radio frequency identification industry is on the cusp of rapid growth. When precisely we will reach the tipping point, I can't say (though I will provide some insights in the next issue of our digital magazine). But I can say that both potential users and providers of RFID technologies will be caught unprepared for the rapid acceleration in adoption.

As a journalist, I've seen it happen before. In the late 1990s, I was an editor at Information Week, a leading IT trade publication in the United States. As late as 1999, CEOs of major corporations were dismissing the Internet as something meaningful for business. Some said they couldn't trust their supply chain to a public network that could go down at any time. Others said no one would come home from working on a computer all day and then shop online.

Things changed quickly—and dramatically. By 2000, General Electric and other companies were trumpeting their use of the Internet. Analysts began to ask CEOs about their Internet strategy on quarterly calls with investors. Suddenly, millions of dollars were being poured into websites. In many cases, the sites were poorly built because the most experienced and sophisticated developers had already been hired. Millions of dollars were wasted.

The same thing will happen with RFID. CEOs who are now dismissing RFID as useless—amazingly, many still do—will be taken by surprise when the technology takes off, and will have to scramble to catch up. They will wind up hiring second- or third-rate systems integrators who have also jumped into the game late and know little about RFID. Projects will be bungled, and will require cost additional dollars to fix.

RFID vendors will also be caught by surprise. Many companies have been burned by investing too much too early in anticipation of growth that never occurred. Now, many are holding back on investing in capacity, because they are concerned that the growth won't materialize. When it does come, there will be a scramble to try to meet demand. Some companies will be outflanked by more nimble competitors and lose market.

What should companies do? My advice to potential users of RFID, particularly in apparel retail, is to begin exploring the technology now. Get a pilot going and identify reliable providers of RFID hardware, software and services. That way, you will have an understanding of the technology, some internal expertise and some outside companies with which you can work. Don't wait until your competitors announce major rollouts before you begin thinking about using RFID.

RFID vendors have more difficult decisions to make. They have to manage their burn rate, and if they invest too much in capacity and it doesn't materialize, they will face a cash flow crisis. I would advocate increasing marketing budgets in select markets that are seeing growth. Building brand is going to be important as adoption accelerates. Continue investing in product improvements and partner to create a whole product.

Spending limited marketing dollars wisely can help create brand awareness in a particular market, so when a company—say, a medical device manufacturer—wants to use RFID, it thinks of your tags or software. Right now, very few RFID companies have much brand awareness, so the market is wide open for any company to become the "gorilla" (the dominant player) in a particular industry.

Targeted marketing can lead to sales, which can be reinvested in either capacity or more marketing. There's another benefit as well: If you need to raise funds, venture capitalists are more likely to invest in a company that has brand awareness in a target market.

RFID Journal has been investing in preparation for growth. We built a custom content-management system for our news and events sites, and moved all of our sites to a cloud-based architecture. If traffic had ramped up with our old, server-based system, the site would have crashed quickly. Now, we can handle any spikes in traffic. We are planning new non-English sites, but will need to manage our investments in the same way vendors need to manage theirs. So I understand the challenges. The important thing is to recognize that growth is coming and that it will be rapid, and to try to be prepared.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.

rfidjournal.com

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From: Glenn Petersen5/23/2015 5:52:46 PM
   of 1712
 
h/t JaleStraw

NXP Semi: Up 643% Since IPO, the Story’s Not Over, Says Bernstein

By Tiernan Ray
Barron's
May 12, 2015, 10:45 A.M. ET

Shares of chip maker NXP Semiconductor ( NXPI) are up $1.60, or 1.5%, at $101.97, after Bernstein Research’s Stacy Rasgon this morning initiated coverage of the name with an Outperform rating, and a $133 price target, writing that the stock has already been a “home run” since its IPO in 2010, but that there’s more to come as the company heads toward its merger with Freescale Semiconductor ( FSL).

“In short, we believe the story is not yet over,” he writes.

“Over the intervening 5 years or so [since IPO] the stock has returned more than seven-fold to investors, a ~50% compounded annual return over the time period, due to a combination of improvement in fundamentals, deleveraging, and multiple expansion,” notes Rasgon.

Rasgon sees a few reasons why there’s more upside left:

In particular, we believe the company can likely maintain their above-market revenue growth trajectory, due in large part to the structural benefits of automotive exposure and continued growth in mobile payments, with overall revenue diversification helping to at least partially mitigate downside from any one given market. We believe the forthcoming Freescale acquisition may hold more to it than meets the eye. And we believe (with $9-$10 in likely earnings power post-deal) that valuation is compelling.

Rasgon likes the profile of the part of the company that is “high-performance mixed-signal” chips, which makes up just under 75% of total company revenue.

Such “HPMS” chips go into the sensor hub that collects sensor data in Apple’s ( AAPL) iPhone, for example; and a lot of it goes into connected cars, and things such as digital identification for electronic passports.

Rasgon is very excited about the automative and the NFC transactions capabilities in mobile (such as Apple’s Apple Pay):

Automotive: ~25% of NXPI’s HPMS business, with a leadership position in audio entertainment, in- vehicle networking, and secure car access. Overall we are positive on the auto semiconductor market in general and believe trends around content increase can disproportionately benefit NXP. The company believes it can grow faster than the SAM of the auto markets they target (6-7%), with growth targets of 8-9%. The FSL acquisition will further solidify their presence in automotive in complementary markets. Secure Connected Devices: ~25% of HPMS, a bit of a hodgepodge of business that include multimarket microcontrollers, mobile audio/sensing, low-power RF/IoT, and silicon tuners. However, it also includes NXPI’s mobile transactions business (e.g. near-field communication), about ~$400-450MM currently and with the potential to drive very strong growth as we remain in the early days of mobile payments.

Of “secure ID” portion, including the government e-passport work, he writes “overall, this business is the most difficult to forecast due to lumpiness of government projects.”

The other 25% of company revenue is “standard products,” of which Rasgon writes, “This is primarily a discretes business, with lower growth and margins than HPMS. NXPI likes to say that it is the “best” discrete business out there (and they may be right); it is a candidate for sale if the company can ever drum up enough interest at the right price. In the meantime, it generates cash.”

Rasgon’s very positive on the pending Freescale deal:

We think the deal makes sense strategically, with a more complete product portfolio, cost synergy, and potential revenue synergy down the line. We believe cost synergies (~14% of current combined opex, as well as scale benefits) appear reasonable, and NXPI may be able to accelerate the leverage inherent in FSL’s current model […] Finally, there could be additional revenue and/or balance sheet synergies (including debt refinancing) that could drive more upside […] The combined company will hold more than $11B in annual revenues, making it the largest semiconductor supplier to the automotive and MCU markets, and one of the largest semiconductor companies overall […] Additionally, it is likely that NXPI can do positive things with FSL’s balance sheet, particularly given the latter is paying interest at a higher rate than the former. We also note that the sale of NXPI’s high-performance RF business (whatever it might sell for) should bring in additional cash that can be deployed to further de-lever the balance sheet.

And NXP stock is a good value considering the earnings power of the combined companies, he writes:

NXPI’s current valuation appears fair. However, valuation for the combined company significantly improves once taking into account appropriate cost synergies. – In particular, the combined company (on a pro-forma basis) would likely be trading at ~10-11x P/FE, extremely attractively valued. On an EV/sales or EV/EBITDA basis, the company trades in line to slightly below peers on the same basis, for substantially higher growth potential. Hence, we view valuation as compelling. The standalone company has been trading at ~14x NTM EPS for the last year prior to the deal announcement; we believe such a valuation on the combined company is fair as well. On a potential $9-$10 in normalized combined EPS, this would correspond to a ~$133 target price.

blogs.barrons.com

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