Alien Challenges Yield Figures

The company, which has postponed its IPO, calls a claim about its yield "absolutely and dramatically incorrect information."

After stepping back from its planned initial public offering on July 28 to "when market conditions improve," an Alien Technology executive defended the companys manufacturing yield and why the companys IPO was delayed.

Linda Prosser, Aliens corporate marketing vice president, said the company had always been slated to launch its IPO July 28 and that the decision to move it to day-by-day status—where the company is not saying that it will go public on any particular day but is awaiting better market conditions—was not related to anything about Aliens financial health or product status and that the only influences were "geopolitical events."

But Prosser mostly wanted to refute some comments made on these pages by a veteran analyst—Pete Abell—now working for IDC.

"The key problem is that they continue to hemorrhage money. Their highly self-touted FSA manufacturing process gets yields in the 15 percent range, and they currently sell readers to Wal-Mart at $200 below manufacturing cost," Abell, the program director for RFID at IDCs Manufacturing Insights, said in the stories from July 28. He added that Texas Instruments "has a great new UHF chip just certified by EPCglobal, which will compete with Impinj, and Aliens is an also-ran." TI announced the availability of that chip on July 31.

Prosser went on the record to dispute Abells 15 percent yield statement, dubbing the claim "absolutely and dramatically incorrect information." When asked what an accurate yield would be, she initially said it would be "competitive" and then—when prompted—said that it would be "north of 90 percent" but quickly amended that to be "north of 80 percent."

Abell, reached July 31, stood by his original figures. "Every person that has been to their factory [whom Abell has spoken with] says it has been in the 15 percent range," he said.

Abell added that even if the figure was 90 percent, it would still be inadequate. "Even 90 percent is not good enough because youre still throwing away too many chips," he said.

Prosser took exception to the Wal-Mart reference, dismissing it as an old rumor that has never been confirmed. Asked if its indeed incorrect, she said that it was not completely accurate as it was phrased, but that she couldnt clarify because pricing information about customers is strictly confidential.

On July 31, Abell said that the TI chip availability announcement "really nails the coffin closed on Aliens IPO."

The IPO has been watched closely as it will give Wall Street an opportunity to comment on its RFID sentiments through this signature trading symbol, which will let Alien enjoy the fruits—and suffer the punishments—of an RFID movement with an uncertain future. If its IPO completes, Alien will be trading as the symbol RFID.

The Alien IPO prospectus caused a bit of a stir because of its candid comments about RFIDs challenges, which have been well-documented in various analyst reports, including a recent report from the Aberdeen Group. The author of that Aberdeen report and other analysts discussed Aliens challenges at a retail technology site audiocast July 27 and concluded that Alien could fare quite well if Wall Street permits.

Alien had been expected to offer 9 million shares at an anticipated $10 to $12 a share in a bid to raise $99 million in its IPO July 28.

Retail Center Editor Evan Schuman can be reached at


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