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Apple Pays $356 Million For AuthenTec In Possible Prelude To Mobile Payments

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Apple bought AuthenTec Inc., a maker of fingerprint sensors and security solutions, for $356 million, a move analysts say that helps turn iPhones and iPads into more secure devices for mobile payments.

Apple is paying $8 a share for the Melbourne, Florida-based company, according to an SEC filing. AuthenTec, founded in 1998, says it has shipped more than 100 million fingerprint sensors for use in PCs and other electronic gadgets, including more than 15 million mobile phones. Apple’s Mac computers currently don’t have a fingerprint pad for security purposes, though other PCs do.

With $117.2 billion in cash, Apple’s outlay for AuthenTec is very small change. What it gets, in addition to 217 employees, is technology and patents from a company that says it “owns many of the foundational technology patents from the fingerprint biometric industry, and today has a broad IP and patent portfolio consisting of nearly 200 issued and filed U.S. patents, as well as additional foreign patent derivatives.”

AuthenTec customers include Alcatel-Lucent, Cisco, Fujitsu, HBO, H-P, Lenovo, LG, Motorola, Nokia, Orange, Samsung, Sky, and Texas Instruments. The company has $69.8 million in sales, with 64 percent of its revenue coming from its fingerprint and other smart sensors and the rest from network and mobile system security solutions.

Brian White, an analyst with Topeka Capital Markets, says the deal not only suggests Apple hardware with fingerprint access , but also a mobile commerce system built using the Near Field Communications (NFC) technology he predicts will be included in the new iPhone 5.  Any NFC-enabled device can basically talk/control other devices just by bringing them in close contact with each. (A new Apple patent published yesterday talks about how the iPhone could be used to control other devices at home using NFC.)

There’s been talk about Apple’s mobile-payment ambitions for a few years, and speculation heated up again when Apple CEO Tim Cook introduced a new feature called Passbook that lets users consolidate tickets, boarding passes and discount cards in one place. Turning it into a digital wallet seems likely a next step.  Passbook is a feature of iOS 6, the new version of the mobile operating system for the iPhone and iPad that Apple says will be released this fall. (The release of a new version of iOS typically coincides with a new iPhone model, hence predictions about a September or October release for the iPhone 5.)

Apple describes Passbook this way: "With Passbook, you can scan your iPhone or iPod touch to check in for a flight, get into a movie, and redeem a coupon. You can also see when your coupons expire, where your concert seats are, and the balance left on that all-important coffee bar card.”

As for AuthenTec, here’s White’s take on the news:

In the future, we can envision AuthenTec's smart fingerprint sensors being used on Apple products such as the iPhone, iPad and Macs. AuthenTec recently introduced its first smart sensor for the NFC mobile commerce market and last August completed the first "fingerprint-enabled NFC payment transaction in the U.S. with NXP and DeviceFidelity. As we have indicated in the past, we believe the iPhone 5 will have NFC capabilities but with a "special twist" that could be customized for the iTunes platform. We believe the addition of smart fingerprint sensor technology that caters to the NFC market would help the company's efforts in this area.