THYRA ZERHUSEN
PORTFOLIO MANAGER
ABN AMRO MID-CAP FUND

COMPANY: Zebra Technologies
TICKER: ZBRA (Nasdaq)
PRICE: $42.10 (as of 4 p.m. yesterday)
52-WEEK RANGE: $34.88-$48.67
MARKET CAPITALIZATION: $2.97 billion

Thyra Zerhusen is a portfolio manager at the ABN AMRO Mid-Cap Fund (CHTTX). Zebra Technologies designs and manufactures specialty printing devices for applications such as barcode printing,t o assist with corporate supply chain management. Ms. Zerhusen spoke to David Dalley of The New York Sun about why she thinks the stock could increase by almost 50% over the next two years.

What does Zebra do?

They’re involved in manufacturing printers and labeling devices for barcoding. They help with corporate supply chain management.They also do radio frequency tagging for things like container shipments.

Why do you like it?

It looks really well-positioned for growth over the next few years. It has significant market share in what it does.

What’s driving growth?

What’s really driving growth is a desire by companies to use information more efficiently. Hospitals, for exam ple, use technology developed by Zebra on patients’ wrist bands. It allows doctors to just scan the tag electronically to retrieve all the relevant information.That leads to fewer errors and fewer mix-ups between patients.

They also just signed a contract with McKesson (MCK) that supplies healthrelated products to various health care facilities around the country. They will be using Zebra’s products to operate and monitor their supply chain more efficiently.

What do you think the stock’s worth?

Well, it’s currently trading at around $42.12. I think that it could go back to where it was 18 months ago, at around $60, over the next couple years.

Why is it undervalued?

I think that the market has ignored this stock. It had a disappointing year last year due to surprising weakness in retail markets, but nonretail markets are growing well. Europe is growing, China is growing, so that all bodes well for the company. Zebra has spent a lot of money setting up operations in China. They have very good management and an excellent balance sheet, with around $600 million in cash. They’re well-positioned to capture the growth potential overseas.

Do you expect conditions locally to pick up this year?

Last year was an anomaly.In the com pany’s entire history, last year was only the second year that net income was down. And even though it was a slow period, they made the decision to keep spending on technology and development. I don’t expect the slowdown to continue this year. I expect income to be up for 2006.

Do they have any major competitors?

These guys appear to be by far the best in terms of critical mass and their capacity to deal with the international growth. They’re also ahead of the competition in terms of technological development. For example, they’ve just brought out a range of wireless products, printers and the like, for use in warehouses and manufacturing centers. They really are the leader at what they do.