Identive's Exclusive Pact With Google Could Mean Millions

Includes: GOOG, INVE
by: GuruFundPicks

Identive Group, Inc. (NASDAQ:INVE), a developer of hardware and software that enables secure access to digital content in PC and flash media products, announced earlier this morning that its subsidiary ACiG Technology has been selected as the exclusive supplier of near field communication (NFC) RFID stickers for the roll out of Google’s (NASDAQ:GOOG) marketing campaign for Google Places in Austin, Texas. The NFC stickers are manufactured by ACIG’s sister company, Singapore-based Smartag, which was acquired by INVE on November 1, 2010, from France-based Group FCI SA.

Google is currently testing the service in Austin, distributing the 80x50mm stickers to local business owners to help connect them to consumers and advertise their products and services using RFID technology tied to Google Search for local information. The "smart" stickers are designed to be part of posters or other display ads for local businesses so that consumers with NFC-enabled mobile phones who have downloaded the Google Places app can simply touch their devices to the stickers to access all kinds of relevant information about a local business from across the web – such as its address, phone number, hours of operation, payment types, helpful reviews and more.

In addition, consumers will be able to rate or review the business right from the webpage on the mobile device, and then receive more personalized local recommendations in their search results based on their opinion and those of their friends.

This can potentially be a huge deal for Fremont, California-based Identive Group, a $130 million market cap company, as it's been selected as the exclusive supplier by Google of what could be a new and high growth opportunity in business to consumer (B to C) marketing.

According to ComSore, in February 2011, Google sites had a 64.6% market share of the 17 billion total explicit core searches performed in the U.S., which annualized would be about 132 billion searches for Google. Since about 20 percent of all searches on Google are for local information, that would be 26 billion local searches a month. Another way to look at this: According to the U.S. Census Bureau, there were an estimated 7.7 million business establishments with employers in the U.S. in 2007.

Google is currently selling the Google Tags and Boost services to businesses for a $25/month and $50/ month fee, respectively. While the NFC RFID approach is different than that, pricing could be set somewhere in that range, so that even with moderate penetration this could be a huge multi-million dollar opportunity when and if the system is extended to the entire U.S. The possible revenue to INVE from selling these NFC RFID stickers could be significant, given that it generated only $85 million on a trailing 12-month basis.

The stock closed yesterday at $2.66 and after opening at $2.96 is trading significantly higher at the time of this writing in the $3.20s. However, it is still near the bottom of its $1 to $10 range in the last eight years.

A total of 21 Institutions hold 3.8 million shares or 8% of the shares outstanding shares, down from 22% in the prior period. Insiders have been net buyers, adding 0.9 million shares in the prior 12 months.

Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online® and Zacks Investment Research.

Disclosure: I am long INVE.