New CEO remaking FPC to end reliance on mobile biometrics market
Biometric sensor maker Fingerprint Cards has announced the second significant corporate change in as many quarters. That news comes as the company reports another fiscal quarter with few positive surprises.
“Current market conditions in our largest operating segment mean our gross margin is at a level that is economically unsustainable given our existing cost base,” says FPC‘s new CEO Adam Philpott in a statement. He is restructuring how FPC operates.
In other words, the company is hanging by a frayed rope tied to mobile-device sensors and Philpott feels it needs to rethink familiar fundamental strategies and processes to survive.
It is part of a sprawling product strategy called the Biometrics Platform. It seems as though it has been edging into reality at least for the previous several months.
FPC announced in July it would alter the company by adding a unit for generating new business that will seek new business partners, buyout targets, automotive buyers and ways to turn patents into revenue.
In a statement this week, Philpott pledged that reorganizing as a functional organizational, or centralized, model — one of the oldest corporate models – will save about SEK 204 million (US$18.5 million) a year. It will be in place beginning next summer.
FPC describes its current setup as a scalable business model, one that is more flexible than other models.
Behind all this is corporate complacency, expecting mobile orders to return to historic levels. But the prophesied turnaround in the phone market has not arrived, he said, and even if it did, the mobile market is mature, which means intense price pressure that melts gross margins.
The Biometrics Platform strategy will address this by trying to mine revenue from government and security, enterprise and industrial, health care and financial businesses. Philpott says they make up three-quarters of all revenue in biometrics, a condition that is not reflected in FPC’s efforts or rewards.
He also says he is interested in developing software licensing, biometrics for emerging technologies and even buyouts.
That last ambition might be a medium-term vision, however.
For the third quarter, ended September 30, the company reported a loss of SEK 63.8 million ($5.83 million), or SEK 0.17 ($0.016) per share, on revenue of SEK 184.8 million ($16.9 million). For the same period last year, the company reported a loss of SEK 59.8 million ($5.47 million), or SEK 0.17 ($0.016) per share on revenue of SEK 143.2 million ($13.1 million).
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