Five-Day Forecast: Zebra Changes Stripes

The hype around RFID reached a fever pitch in 2006 when Wal-Mart (WMT - commentary - Cramer's Take) announced plans to deploy RFID systems across its whole network of warehouses and stores. Other retailers, such as Best Buy (BBY - commentary - Cramer's Take) and Target (TGT - commentary - Cramer's Take) announced their own aggressive RFID plans.

And many assumed that suppliers, such as Procter & Gamble (PG - commentary - Cramer's Take), would quickly adopt RFID as well, since many of its retail customers had begun speaking of "RFID mandates."

But RFID never moved into the mainstream. Instead, retailers and their suppliers have stayed with barcodes, noting that the industry needed to become far larger for costs to drop enough to become competitive with barcodes -- a classic chicken-and-egg conundrum.

"This is not the game-changing technology that a lot of investors had hoped for," says Stanford Group's Jeremy Grant. He remains bullish, but notes that "the uptake of RFID across the enterprise is going to be gradual."

That would be in stark contrast to the rapid adoption of barcodes seen in the 1990s. Back then, many grew weary of the long-awaited and still-unfulfilled promise of barcodes. And just as barcode stocks hit a multi-year low, barcode usage exploded overnight, thanks to a big push from UPS (UPS - commentary - Cramer's Take)and FedEx (FDX - commentary - Cramer's Take).

So perhaps, as some believe, RFID will soon emerge as the hot new technology. If and when that happens, shares of Intermec could get a solid boost, as that company owns many RFID patents. Major industry players have all licensed Intermec's intellectual property (IP), and the company's bulls believe that Intermec stands to garner millions in annual royalties. Stanford's Grant is not as bullish, and values Intermec's IP stake at just $3-$4 a share.

As the near-term prospects for RFID have receded, so have shares of Intermec, which now trade at a three-year low.

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David Sterman has been an equity analyst and financial journalist for 15 years, most recently serving as Director of Research at Jesup & Lamont Securities.