GE Exits Truck Trailer-Tracking Business
This story appears in the Feb. 1 print edition of Transport Topics.
I.D. Systems Inc., Hackensack, N.J., paid $15 million in cash to purchase General Electric Co.’s trailer-tracking business, Asset Intelligence LLC, the companies announced.
The deal takes General Electric, previously one of the biggest players in the market, out of the trailer-tracking business and brings in an owner not previously involved in trailer tracking.
In its core business, I.D. Systems makes radio frequency identification tracking systems for industrial vehicles, such as forklifts and airport ground-support equipment, and for fleets of rental vehicles.
“This is by far, without question, the best possible complementary business to ours,” Jeffrey Jagid, chief executive officer of I.D. Systems, said in a conference call for analysts and news media earlier this month.
GE had been involved in trailer tracking since 2003, when it launched its satellite-based VeriWise product. In 2007, the company added cellular-based tracking services to its technology portfolio by acquiring Terion Inc., Plano, Texas.
Asset Intelligence now is a wholly owned subsidiary of I.D. Systems, the company said. Darryl Miller will remain with Asset Intelligence as chief operating officer.
Acquiring Asset Intelligence puts I.D. Systems, which was previously not engaged in the trailer and container tracking business, among the top three providers of the technology alongside Qualcomm Inc., San Diego, and SkyBitz, Sterling, Va.
In a 2009 report, C.J. Driscoll and Associates, a consulting company in Palos Verdes Estates, Calif., estimated that Qualcomm had about 160,000 untethered trailer-tracking units in the field. SkyBitz also had about 160,000 units in service, and Asset Intelligence had about 120,000 units deployed, according to the report.
Jagid said that his company, which has lost money in six of the past seven quarters, had been looking for an acquisition to complement its RFID business.
Miller confirmed that Asset Intelligence had been losing $5 million to $10 million a year.
I.D. Systems projects that the combined business will be profitable by early next year. The company is banking on a regimen of cost-cutting, combined with an expected influx of orders from customers who have been sitting on cash, to jump-start the initiative.
“We need to grow that top line,” Jagid said. That means “running the business a little different than GE was.”
In particular, I.D. Systems said that outside consultants formerly employed by Asset Intelligence will be let go, slimming the unit’s expenses without biting into the sales force that Miller built up at GE.
Miller added that during the year and a half he ran Asset Intelligence for GE, the company was able to reduce its operating expenses to $25 million a year from $35 million, partially “in preparation for it to be a stand-alone business.”
Miller also said a number of existing Asset Intelligence customers are poised to loosen the purse strings for technology investments this year, but he would not identify them by name.
Existing customers include refrigerated hauler Marten Transport Ltd., Mondovi, Wis.; truckload carrier Knight Transportation Inc., Phoenix; and retailer Wal-Mart Stores Inc., Bentonville, Ark.
Wal-Mart was an I.D. Systems customer before the Asset Intelligence acquisition. The retailer typifies the entity that I.D. will target for cross-selling opportunities.
“There are a number of companies in the Asset Intelligence pipeline that could use our technology and a number of companies in our pipeline that could derive significant benefits from Asset Intelligence,” Jagid said on the conference call. “Wal-Mart is a good example.” He said Asset Intelligence already is tracking about 57,000 Wal-Mart trailers.
Meanwhile, Asset Intelligence will remain the preferred supplier for trailer-tracking technology for Trailer Fleet Services, GE’s trailer-leasing business. I.D. Systems said on the conference call that Asset Intelligence has about 12,000 units deployed at GE Trailer Fleet Services.
