Thanks Vishal! As a general comment, i think Zebra is very attune to technological trends that could potentially disrupt them, and they start investing in those technologies early to pre-empt it.. They did this with RFID (which is a substitute for barcodes) and now have a pretty decent RFID business, and a lot of of their investments, whether it's organic or M&A, are now focused on the trends of warehouse automation and machine vision etc (Fetch Robotics, Matrox), so they are looking to position themselves in those areas in case they take off. I also think at least for the foreseeable future it will probably be people and machines working side by side. I find it hard to see automation systems completely phasing out humans, so i think (hope) that Zebra solutions will be relevant for a long time to come.
Very well written deep dive. Honestly I wasn't aware of this company, and I've been very impressed with them from what I've read so far. Thanks for bringing this to my attention.
Glad you provided sensitivity analysis for the valuation, as that provides good guide posts.
Integration of acquisitions is always a risk. Do you have any insights into how the previous acquisitions have integrated so far, especially in terms of systems and cultural fit?
Great question re integration risk. Mostly what they do is smaller bolt-on type acquisitions of adjacent capabilities, no 'risk the company' type transactions, and they have a good playbook here given how many they've done. The acquisitions have so far have been value-accretive according to mgmt, but you can also see it in their customer case studies (link below), eg. lots of customers now using the workforce management solution which came out of the acquisition of Reflexis. I think integration risk is also managed by 1) them being constantly in discussions with customers about what their needs are, so when they acquire capabilities they have a good sense of what will be valuable, and 2) they do small venture investments first to get some exposure to businesses, work with them and learn more about them, and if they see a really good fit they'll proceed with a full acquisition then (like what happened with Fetch Robotics). Having said that they did do a large $3bn+ acquisition of Motorola Solutions Enterprise in 2014 for which they levered up massively, but this also turned out to be a huge success as from this came the very valuable mobile computers business, which is now the core of the company. Hope this helps
Good
Nice write up! What impact do warehouse automation systems like Autostore and Ocado have on Zebra if any?
Thanks Vishal! As a general comment, i think Zebra is very attune to technological trends that could potentially disrupt them, and they start investing in those technologies early to pre-empt it.. They did this with RFID (which is a substitute for barcodes) and now have a pretty decent RFID business, and a lot of of their investments, whether it's organic or M&A, are now focused on the trends of warehouse automation and machine vision etc (Fetch Robotics, Matrox), so they are looking to position themselves in those areas in case they take off. I also think at least for the foreseeable future it will probably be people and machines working side by side. I find it hard to see automation systems completely phasing out humans, so i think (hope) that Zebra solutions will be relevant for a long time to come.
Very well written deep dive. Honestly I wasn't aware of this company, and I've been very impressed with them from what I've read so far. Thanks for bringing this to my attention.
Glad you provided sensitivity analysis for the valuation, as that provides good guide posts.
Integration of acquisitions is always a risk. Do you have any insights into how the previous acquisitions have integrated so far, especially in terms of systems and cultural fit?
Thanks Vihar! Glad you found it helpful.
Great question re integration risk. Mostly what they do is smaller bolt-on type acquisitions of adjacent capabilities, no 'risk the company' type transactions, and they have a good playbook here given how many they've done. The acquisitions have so far have been value-accretive according to mgmt, but you can also see it in their customer case studies (link below), eg. lots of customers now using the workforce management solution which came out of the acquisition of Reflexis. I think integration risk is also managed by 1) them being constantly in discussions with customers about what their needs are, so when they acquire capabilities they have a good sense of what will be valuable, and 2) they do small venture investments first to get some exposure to businesses, work with them and learn more about them, and if they see a really good fit they'll proceed with a full acquisition then (like what happened with Fetch Robotics). Having said that they did do a large $3bn+ acquisition of Motorola Solutions Enterprise in 2014 for which they levered up massively, but this also turned out to be a huge success as from this came the very valuable mobile computers business, which is now the core of the company. Hope this helps
https://www.zebra.com/ap/en/resource-library/success-stories.html
Brilliant, thanks for the explanation Punchy!!!