Identive Group: 'Speculative' Play Gaining Momentum in Secure Identification Tech Market

| About: Identiv, Inc. (INVE)

This article is a follow-up to an earlier one I wrote on April 12 on Identive’s (NASDAQ:INVE) "Exclusive" Pact with Google (NASDAQ:GOOG) announced two weeks ago. Identive Group subsidiary ACiG Technology had been selected as the exclusive supplier of near field communication (NFC) RFID stickers for the roll out of Google’s marketing campaign for Google Places in Austin, Texas. The stock reacted very strongly to that news, rising from $2.66 at close on the day prior to the news to an intra-day high of $5.90 the next day. Since then, it is still up strongly closing at $3.48 yesterday for a two-week gain of almost 30%, but it is also down significantly from the recent $5.90 high.

In the last two weeks, INVE has issued even more positive news. Last week, on Monday the 18th, the company announced that one of its subsidiaries, SCM Microsystems, won an initial order for 10,000 German eHealth terminals to support the launch of the electronic health program in Germany that would support the deployment of more than 80 million electronic health insurance cards to German citizens. Today the company announced that another subsidiary, Hirsch, had delivered an access control solution to New York City’s first supportive housing project to be Silver-LEED (Leadership in Energy and Environmental Design) certified. The company explained that Hirsch’s access control system would provide security for residents and also track and share occupancy data with the building's energy management system, and building systems such as heating and lighting would be automatically turned on or off as residents enter and leave their apartments, reducing energy use and providing protection against appliance-related fires and other accidents.

The company has not given any dollar amounts for any of these projects, but of the three only the German eHealth terminals is a regular multi-system order. The ACiG project, although "exclusive," is currently only for the roll-out of Google Places in Austin, Texas, and today’s Hirsch project also seems to be a one-time demonstration project for its technology. Of these three, only the German order, which is only the first order per the company for implementation of the German eHealthcare system, can be estimated. Taking say a range of $100-300 per eHealth terminal, the 10,000 unit order would generate $1 million to 3 million; and it can be assumed that there would be more orders coming as the German eHealthcare system is rolled out and possibly even more were the system successful and sold to more countries.

What is probably more important than just the individual dollar amounts of each of these early contracts is probably the implementation of the company’s technologies in building the world’s signature company in secure identification-based technologies. The Identive Group of companies includes seven subsidiaries, each of which deals with different elements of creating that ecosystem. Of these, the first five are product-based companies and the last two are management services based companies:

  1. SCM Microsystems provides the world's broadest range of contact, contactless and mobile smart card reader and terminal technology, digital identity and transaction platforms, as well as systems that integrate physical and logical access control for enabling security and identification applications, transaction systems, eHealth and eGovernment programs and physical access systems.
  2. TagStar Systems is a leading supplier of RFID inlays for ticketing, labeling, smart cards and special transponder designs in both HF and UHF frequency bands.
  3. ACiG Technology is a supplier and distributor of RFID inlays, cards, transponders and reader components for the RFID and smart card industries, with an extensive market and technology knowledge of the RFID and Near Field Communications (NFC) markets.
  4. Syscan ID is a leading producer of RFID ISO wand readers, also known as electronic id readers (EID) for livestock. The company is centered on the areas of animal ID, traceability, country of origin labeling (COOL) and age verification, as well as in industrial applications where a rugged RFID hand held reader is needed.
  5. Smartag is a leading producer of high frequency (HF) and ultra high frequency (UHF) RFID inlays and inlay-based solutions including labels and smart tags. The company's ability to utilize multiple antenna technologies and designs provides Smartag significant versatility in customizing solutions for different applications, including asset tracking, ticketing transactions and secure mobile payments.
  6. Hirsch Electronics designs, manufactures and sells security and identity management systems that integrate access control, video surveillance, intrusion detection, building management and other network-based systems using a wide range of credentials, including digital certificates, smart cards, RFID cards and biometrics.
  7. Multicard is a worldwide supplier of card solutions for secure identification programs, with in-house capabilities for credential issuance, personalization and fulfillment services for the consumer, government, education, healthcare and corporate markets.

As may be evident, the company has a comprehensive approach to the market for secure identification-based technologies, a trend that is gaining momentum as also explained in my article earlier today on, “White House Sponsored 'Identity Ecosystem' Initiative Provides Investment Opportunities.” Of course, INVE addresses markets much wider than just what the Identity Ecosystem addresses as it also includes livestock and asset tracking among others.

Perhaps, the correct way to think about this company is in terms of a "speculative" play on an emerging market that will gain momentum in the months and years ahead. The stock may continue to be volatile as there is rightfully two different ways of looking at it; one in terms of the "pure" numbers that it is and can deliver in the short-term, and the other in terms of its promise in being a significant player in an emerging market. As usual, one should only put "speculative" dollars at work here, as the future of this company is far from certain, but at the same time it also holds promise.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix by Edgar Online, Zacks Investment Research, Thomson Reuters and The information and data is believed to be accurate, but no guarantees or representations are made.

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Disclosure: I am long INVE.