SETTING THE SCENE
To date, we have only been allowed to see Racom undergoing a series of changes, ostensibly restructuring. At first, I didn't think much about it, a new director here, a resignation there #reply-5338507, a common occurrence in today's business world. But as changes in management became more significant, e.g., a new Chairman (Hinds) #reply-5338776, I began to wonder about the forces that were driving these changes #reply-4228526, #reply-4253719. Individually, each seemed ordinary, but taken together, the imprint of a takeover was beginning to form and Hinds was at its epicenter.
On the surface, the changes appeared systematic, but some were more than that. Some were as if Racom had finished the play before the ball was snapped; e.g., the proxy shows the newest member on Racom's board (Hinds) had received more options in the 1997 round than any other member, including the reigning Chairman (Fear) and CEO (Horton). Shortly after the annual meeting, Hinds was elected Chairman and his title suddenly became worthy of his options. This reverse order of a natural process suggests Racom was following some kind of a master plan.
Considering Ramtron and Intag collectively control Racom, Hinds' sudden rise to power begs the question:
Why were Ramtron and Intag demoting their own people in favor of consultant who appears to have walked in off the street?
What kind of power would you or I need to take the helm at Racom?
Considering the argument could be made that both Ramtron and Intag could do with a little overhauling of their own, why weren't they trying to fix their own houses first?
The answers to these questions, here in lies motive.
PLAUSIBLE MOTIVE FOR INTAG - The only news on Intag's homepage is a 11-13-97 message from its chairman to the stockholders at their annual meeting. Bids for projects like the Hajj Passport Project in Saudi Arabian; traffic infringement cards for the People's Republic of China; and electronic passports for Egypt, Syria and Iran have not materialized. Like my neutered dog, Intag has apparently been unable to capture new business. No wonder the Spencer Edwards representative at Racom's annual meeting asked if Intag plans to liquidate its position in Racom. (Note: the answer to this question was "no"). In short, Intag is slipping into oblivion. At some point, Intag is going to have to address the issue of financing in order to stay around. I submit, if the price is right, Intag would be a seller of Racom.
intag-int.com,
PLAUSIBLE MOTIVE FOR BUYER - Racom's RF/ID patents would be a value added product for anyone who wanted to dominate the contactless FRAM smart card market. This coupled with Racom's percentage call on five FRAM manufactures (i.e., Rohm, Fujitsu, Hitachi, plus 2 unannounced) gives a competitive edge that only FRAM manufactures could match.
PLAUSIBLE MOVTIVE FOR RAMTRON - We have long known Racom has been a problem for Ramtron in winning manufacturing licenses for FRAM, particularly with STMicroelectronics (i,e., SGS Thomson before the name change). The underlying purpose of the tripartite agreement was to remove this barrier and capture more licenses. However, the delay in the STM license suggests some concerns remain.
At one point, Sikes indicated the negotiations with STM were complicated, Accordingly, Racom may have been a chip on the table during Ramtron's Phase II negotiations with STM -- quid pro quo for the STM financed fab Ramtron was seeking. Unable to resolve a conflict of interest, negotiations broke down. Thus Ramtron failed on two fronts, obtaining the license with STM but more importantly, it failed to get Racom placed as a portal to the smart card market.
Considering the recent surge of interest in multi-application cards, whoever wins the bank card war will dominate the smart card market. Ramtron's own licensee's (powerhouses with deep pockets, like Rohm, Fujitsu, Hitachi, Toshiba, and Samsung) could easily edge it out of the bank card market -- and they are doing it today. As such, Ramtron would be faced with receiving royalties but no sales from its FRAM designs. Ramtron needs a strategic alliance to establish Racom as a portal to the bank card market.
I submit, Ramtron will have to place Racom as a portal to the smart card market in a strategic alliance and restructure the tripartite agreement before the STM license falls.
UNIFYING THEORY - The combined major events over the past nine months with Racom and Ramtron are eloquently explained by the following unifying theory. This theory is based on the delay/failure of the STM license and Ramtron's response to it. BEA who has a member on Ramtron's board, became aware of negotiating problems with STM and its funds began liquidating its position in RMTR late last year (1997). Also, not landing the license with STM caused a rewrite of the Hitachi license which in turn was delayed until the first of the year (1998). Realizing something had to be done, Ramtron found another company, yet to be disclosed, that was interested in Racom and who sent in Hinds to check things out. Hinds likes what he sees, a confidentiality agreement is signed January/February and a progressive takeover begins, marked by milestones in product development and Hinds rise to power. Likewise, without STM's potential collaboration Racom shifts its focus from the European theater to North America. BEA, now aware of the potential value of Racom becoming a portal of FRAM sales in the US stops liquidating RMTR stock. Without the fab upgrade, Ramtron begins reducing its own manufacturing capacity and shifts emphasis towards selling FRAM from partners. |
