RFID, or radio frequency identification, is considered one of the next big things. This technology, which allows mobile devices to read tags, has tremendous applications in areas such as inventory management, as seen with Home Depot
So, that means RFID companies should be doing well? Not necessarily. Look at Symbol Technologies
As for UNOVA
Next, there is the automated data systems segment, which is in data collection, producing industrial hand-held computers, wireless networking, and RFID technologies.
UNOVA's revenues increased to $217.5 million from $186.6 million in the same quarter last year. During this time, earnings increased to $11.9 million, or $0.19 per diluted share, from $3.2 million, or $0.05 per diluted share, and cash increased $17.6 million to $172.8 million.
Over the past few years, UNOVA has been divesting its industrial automation systems business. The last vestiges should be gone by the end of the year, so UNOVA will then focus on its mobile and RFID businesses.
The RFID business, though, is fiercely competitive. It requires large amounts of legal costs to defend patents. And, of course, there is the continuous investment in refining the technology. To give some perspective, the competitive environment is not much different than that of semiconductors and related goods: Products cycle very quickly, and to some degree they become commodities. This drives prices down and keeps "standards" of innovation high.
However, so far UNOVA appears to be gaining ground on its competitors, such as Symbol and Zebra Technologies, winning contracts next to those competitors.
And, in fact, on the earnings news, UNOVA's stock rose 12.21% to $30.41.
Yet, as investors know, RFID is not an easy business. Success can be fleeting as companies find ways to take back business. So, while RFID providers will benefit from the technologies, the users will likely benefit the most.
Fool contributor Tom Taulli does not own shares mentioned in this article.
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