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Zebra Technologies (ZBRA) |
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WIKI ANALYSIS
Zebra Technologies Corporation (NASDAQ:ZBRA) makes printers which companies use to track inventory. Until recently, this meant barcode printers. However, Zebra's customers are increasingly using RFID technology to track and manage inventory, and Zebra sells RFID printers as well. RFID tags are like bar codes that can be read by a scanner several meters away - for example, RFID tags are used to determine which merchandise needs to be replenished on a shelf or to identify which of the items a shoplifter is carrying through the exit of department store are stolen and which are actually purchased. The market for RFID tags is rapidly expanding as a broad range of companies experiment with and integrate the technology. Wal-Mart, one of the largest supporters of RFID, has required all vendors of its subsidiary Sam's Club to tag pallets shipped with RFID tags. The company earned $804 million in sales and $47 million in net income in 2009.[1]
Slightly more than 50% of Zebra's revenues coming from outside the US.[2] Moreover, the company's international revenues grew at approximately twice the pace of its U.S. revenues. In order to boost growth, the company is also investing heavily in new technologies. However, the company is susceptible to a weak economic environment because the demand for goods, and ultimately Zebra's products, fall. In 2009, the company's net sales fell by 11.7%.[1]
Company Overview
Although traditionally a producer of bar code scanners and printers, ZBRA continues to expand its product range to products that used to track more valuable assets where a high level of security is required. In addition to bar code equipment and RFID devices, ZBRA produces secure printers used to make driver's licenses and national identification cards. In addition to its own research and development program, ZBRA uses acquisitions to enter new markets for inventory tracking systems.
Businesses[3]
- Zebra Specialty Printing Group: this business makes printer products that produce high-quality labels, tickets, receipts, and plastic cards. The company offers around 58 thermal printer models. This business also sells printer supplies, printer related software, and printer maintenance and services.
- Zebra Enterprise Solutions Group: this business offers asset tracking and management products and services. The business is primarily involved with the aerospace and defense, aviation, automotive, industrial manufacturing, maritime, and transportation and logistics divisions.
Products[2]
- Hardware (67% of net sales): The majority of Zebra's net annual sales, comes from the sale of hardware. Zebra produces specialty printers for a range of purposes, notably mobile bar code printers and ID card printers, although ZBRA produces standard desktop printers as well. The ID printers are often used to print driver's licenses or employee identification cards for businesses. The company has sold upward of six million printers to customers in over one hundred countries.
- Supplies (14% of net sales): Once the company sells its customers a printer, it continues to generate additional revenue by selling supplies and charging for shipping and handling. ZBRA typically charges according a pricelist for single-product orders, but will adjust prices accordingly in the rare event that it ships more than one type of product at a time to a single customer. If a loss is incurred in shipping a product, it is recorded as part of the cost of sales.
- Service and Software (13% of net sales)
- Shipping and Handling (1% of net sales)
Business Growth
FY 2009 (ended December 31, 2009)[1]
- Net sales fell 17.7% to $804 million. Revenue fell in all of the products product categories, with it's largest product, hardware, incurring a 22% decline in growth.
- Net income improved to $47 million compared to a net loss of $38 million in the prior year.
Trends and Forces
Sluggish Economy Hurts Demand for Zebra's Products
Zebra's sales growth are strongly linked to the economic environment. In a struggling economy, consumers are spending less money and thus the demand for goods and services decreases. As a result, manufacturers slow down their production. When this happens, they are managing fewer inventories or selling fewer items and thus don't need as many of Zebra's tags to keep track of changes. Zebra's bottom line suffers from this as the demand for its products decline. In 2009,a s a result of the sluggish global economy, the company's net sales fell by 11.7%.[1]
Competition
In the markets for printers and related hardware Zebra competes with Hewlett-Packard Company (HPQ), Canon (CAJ), Xerox (XRX) among other companies. Zebra has an advantage in bar-code printing because bar-code printing is primarily used for inventory tracking and management; Zebra is also able to offer software and services as part of the package, while many of its competitors do not.
- Hewlett-Packard Company (HPQ): Produces a wide range of products including not only printers and RFID devices, but personal computers, imaging devices, and support services.
- Canon (CAJ): Produces imaging devices as well as a variety of printers. Its printer lines that overlap with ZBRA's include desktop, thermal, and label printers.
- Xerox (XRX): Produces printers and office equipment geared for larger businesses.
- Intermec Inc: Produces bar code readers and scanners, mobile computing systems, and RFID devices. Its mobile computing systems are often vehicle mounted and incorporate GPRS.
References
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