Two former National Security Agency scientists built Rockville-based Matrics Inc. into one of the nation’s leading developers of radio frequency identification technology, which tracks everything from luggage in an airport to boxes in a warehouse.
William Bandy and Michael Arneson yesterday sold the privately held firm they founded in July 1999 for $230 million to Symbol Technologies Inc.
Symbol, based in Holtsville, N.Y., makes bar-code scanners to track inventory, but radio frequency identification — or RFID — tracks items wirelessly and is considered more efficient.
Matrics makes tags and readers that work together to pinpoint goods. Tags are affixed to an item and transmit information to a reader, which determines a tag’s location.
“Our customers are telling us an RFID system is important to [their] business. We need to supply tags and readers,” said William Nuti, president and chief executive officer of Symbol.
Shares of Symbol fell $1.47, or 10.5 percent, on the New York Stock Exchange to close at $12.48.
Livestock owners use RFID to identify cattle. This month school officials in Osaka, Japan, said they will place tags in backpacks of students at one school as a safety measure. Wal-Mart has been among the chief proponents of RFID in the retail industry and has said its top suppliers must tag inventory by January.
Matrics markets tag and readers to airlines, airports, retailers, companies supplying retailers and pharmaceutical companies.
“Their technology is widely considered as best in class,” said David Krebs, group director at technology research firm Venture Development Corp., in Natick, Mass.
McCarran International Airport in Las Vegas has ordered 100 million tags from Matrics to attach to passengers’ luggage. The deal will generate $20 million in revenue for the company. Matrics negotiated a $3.5 million deal with the Hong Kong International Airport to install readers in its baggage-handling facilities.
Delta Airlines has said it will spend up to $25 million to tag luggage and it is testing Matrics’ technology on flights from Jacksonville, Fla., to Atlanta. U.S. airlines lost about 2.2 million pieces of luggage last year, but they are slow to adopt RFID in part because of the cost, said Sara Shah, an analyst at ABI Research, in Oyster Bay, N.Y.
Companies spent $1.65 billion worldwide on RFID last year, according to consultant Frost and Sullivan, and spending is expected to double by 2006. Venture capital firms VentureHouse Group, Novak Biddle Venture Partners, the Carlyle Group and Polaris Venture Partners have invested nearly $40 million in Matrics since 2000.
“We have very mixed feelings about selling this company because we were so excited about its prospects,” VentureHouse founder Mark Ein said.
Matrics has 64 employees and will become a wholly owned subsidiary if the transaction earns regulatory approval. Symbol plans to keep Matrics in Rockville.
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