Symbol Technologies Snares New Business

By Richard McCaffery, Staff WriterA $248 million contract win from the Defense Department signals a rebirth of Symbol Technologies Inc.'s government unit and upswing in business for companies that can cash in on the mobile computing craze."This is a big deal for us," said Vinny Luciano, senior director of product management at the Holtsville, N.Y., company. The five-year Automatic Identification Technologies and Services contract, snared from incumbent Intermec Technologies Corp. of Everett, Wash., rekindles Symbol's government division, company officials said. Under this contract, the company will provide bar-code scanning equipment, mobile computers, wireless networking products and bar-code printing devices for defense logistics operations.The company's unit in McLean, Va., which was established in the mid-1980s, will add as many as 20 employees to its current 12 in the next six months to support the nationwide project. The Army Communication Electronics Command in Washington awarded the contract.The Defense Department win is the largest in Symbol's history, and the first major government contract involving the company since landing subcontracting roles on two large Postal Service contracts in 1996 and 1997. "If we wanted to play seriously in the government business, this was a vital vehicle for us," said David Moynihan, Symbol's director of government systems.The company will continue to look for opportunities to bid as a prime contractor, said Luciano, who does not expect any major changes in the company's market strategy.The company relies on systems integrators and resellers for more than half of its business. "We believe very strongly in partnering," said Luciano. Integrator partners include companies such as Lockheed Martin Corp., Bethesda, Md., and IBM Corp., Armonk, N.Y.Founded in 1975, Symbol makes bar-code scanners, portable data terminals and wireless networking devices. The company blossomed as mobile computing technology improved and applications grew. Sales shot from $465 million in 1994 to $978 million in 1998.For the quarter that ended March 31, revenue rose 22 percent over the same period last year, from $213 million to $260 million. Net income rose 24 percent from $19.6 million to $24.3 million.Last year, the company delivered handheld computers to more than 20,000 post offices in the United States as part of an effort to modernize mail delivery under subcontract to Lockheed Martin Federal Systems in Owego, N.Y. That effort has been worth $130 million to Symbol.Symbol completed its part of the contract in November 1998, delivering 330,000 handheld computers to post offices nationwide in 10 months, Moynihan said. The company's other major government deal, the Point of Service contract, also is with the Postal Service. Symbol is a subcontractor to IBM Global Government Industry of Bethesda, Md. The contract was awarded in 1996 and is aimed at modernizing the retail systems at post offices. It has been worth $10 million so far to Symbol, Moynihan said. There is no question the mobile computing market is picking up speed in the federal market. 3Com Corp.'s Palm Computing division is pushing hard to forge partnerships with integrators now that its popular Palm Pilot device can run enterprisewide applications. Other companies, such as Riverbed Technologies Inc. of Vienna, Va., have developed software that allows mobile computers such as the Palm Pilot and Symbol's devices to connect remotely to enterprise applications.Kevin Plexico, vice president of Input, a Vienna, Va., research company, said the federal mobile computing market is growing faster than the federal desktop market. He estimated the federal PC market is growing about 5 percent annually, while the mobile computing market is growing about 8 percent annually.As a result, competition is robust. Symbol's rivals include companies such as Intermec, NCR Corp. and Telxon Corp., which Symbol attempted to buy in April 1998. Telxon's board of directors rejected the offer in May. Symbol's stock, adjusted for two splits in April 1997 and 1998, is trading around $37, near its annual high of $43.25 reached in late 1998.Last year, government contracts made up about 15 percent of the company's business, or $147 million, Luciano said. That included the company's massive Postal Service contract primed by Lockheed Martin.XXXSPLITXXX- Holtsville, N.Y. Makes bar code scanners, portable data terminals and wireless networks Jerome Swartz 3,700 $774 millionIncome: $70 million $978 millionIncome: $93 million