RFID company Alien wants to be valued at half a billion — despite growing red ink

Alien, the company just south of Silicon Valley that sells those little radio chips that are embedded in products so that manufacturers, retailers and the military can more efficiently keep track of their goods, wants to be valued at half a billion dollars in its upcoming IPO.

RFID stands for Radio Frequency Identification.

This is a company whose only business distinction so far has been to log declining sales, and widening losses. The company lost $18 million in the most recent quarter (see page 8 of its prospectus). It loses money on every sale.

Thomas Weisel and Bear, Stearns, two of the banks that are underwriting this IPO, have serious cahones. They were also part of the syndicate which took Vonage public recently, a stock that has only fallen. But it was an IPO nonetheless, and the bankers got paid (to the tune of $32 million).

Alien wants to sell 9 million shares, with an estimated price range between $10 and $12 a share, according to its filing. Counting its total shares outstanding, that puts its implied valuation at around $500 million.

See our previous post on Alien here.

The company has received $266.4 million from players like Advanced Equities Inc (AEI), Sevin Rosen Funds, and New Enterprise Associates.

AEI is an interesting player in this IPO. You’ll see that it is an underwriter of the IPO (see second page of the prospectus), but it is also the largest shareholder (16.7 percent), as you’ll see in description of the rather conflicted relationship on pages 101-105.