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Henry Bros. hit by slowdown (like everyone else)

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Thursday, August 13, 2009
Not that anyone needs more evidence that the first two quarters of this year were particularly bad, Henry Bros. announced its first half results today. The report is predictable, but still somewhat encouraging. While revenue is down - and that's caused them to amend down projections from $80 million to $70 million for 2009 - the company maintained slight profitability and hasn't given back all of the gains it made in 2008. Some bits and pieces:
Revenue - Revenue for the three months ended June 30, 2009 was $13,971,980, representing a decrease of $1,151,971 or 7.6%, as compared to revenue of $15,123,951 for the three months ended June 30, 2008. Revenue was down in all of the Company's integration regions in the second quarter of 2009 versus the same quarter in the prior year, with the exception of Colorado, which was up 57.7%. The New Jersey region had the greatest decrease, as a result of the winding down of large projects that were not replaced by similar projects due to competitive margin pressure. These declines are due principally to the protracted credit freeze and economic downturn which is having a significant negative impact on construction markets and capital spending patterns of commercial businesses. Partially offsetting these declines was an increase in revenue resulting from the L-3 Contract.
The bolding is mine. Essentially, Henry Bros. is saying they could have increased their revenue with some bunk jobs but decided to let other people have the low-margin fruit. This could be an example of the low-bidding I've heard decried in the last 18 months as companies of all stripes become more desperate for work of any kind. In the long run, this is a dangerous practice (NetVersant is held up as example number one of why not to do this).
Cost of Revenue - Cost of revenue for the three months ended June 30, 2009 was $10,081,872 as compared to $11,282,000 for the three months ended June 30, 2008. The gross profit margin for the three months ended June 30, 2009 was 27.8% as compared to 25.4% for the three months ended June 30, 2008. Our Arizona and Mid-Atlantic operations had lower quarter over quarter gross profit margin dollars due to their respective decline in revenues. While revenues and gross profit dollars were down in our New Jersey / New York operation, margins improved as we closed out several of the jobs with large public agencies in the New York Metropolitan area referenced above in "Revenue". Also contributing to the increase in gross profit was the profit recognized under the L-3 Contract.
No surprise that Arizona is getting creamed. Also, those gross margins aren't the best, by any stretch. I've heard a number of integrators say 30 or above is where they'd like to sit. Still, there is some net profit there (theoretically).
Net Income - As a result of the above noted factors our net income was $55,253 for the three months ended June 30, 2009 compared to net income of $337,261 for the three months ended June 30, 2008. This resulted in diluted earnings per share of $0.01 on weighted average diluted common shares outstanding of 6,064,742 for the three months ended June 30, 2009, as compared to diluted earnings per share of $0.06 on weighted average diluted common shares outstanding of 5,976,008 for the three month period ended June 30, 2008.
It's pretty tough to show income of just $55,253 when you brought in $14 million. Ouch. Diluted over $6 million shares? Ouchier.

Follow up on yesterday's summer model company news

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Wednesday, August 12, 2009
Regarding the not-so-positive news stories in yesterday's blog: I got an email from Stuart Dean at APX today. He called the police chief in Lufkin, Texas yesterday to get more information about the report, but as of 11 AM Eastern time, he hadn't heard back. He'll let me know when he gets more information. As far as the so-called "con men in Hawaii," I wanted to call this Leavitt guy from MAX Alarm, but can't even find MAX Alarm on the Web. Anyone know how to get in touch with them? The only thing I found under MAX Alarm was a You Tube video of a golden retriever sleeping.

How many integrators are there?

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Wednesday, August 12, 2009
So, I got an innocuous question the other day from Sarah Seibert, communications coordinator over at PSA: How many security-focused systems integrators are there in the United States? Easy, right? So, I gave a wild-guess response (I was busy, and it didn't seem to be life or death or anything):
"Really hard to say. What's an integrator? When does an alarm company count? Etc. If I were going to ballpark, I would say there are about 25,000 security system installers total, and maybe 8,000 of them do some kind of commercial work, and maybe 1,500 of them are sophisticated integrators with some kind of software engineering capability (and this includes the IT integrators who have become interested in security). That's going by our circulation efforts and industry show attendance. But that could actually be a low estimate. I'd be curious what other people say."
So, I was pretty happy with that. Sounds smart, right? This is what I get back from Sarah:
Thanks for the info, Sam! Here’s what Scott Goldfine said: We estimate about 3,000 of the estimated 12,000-15,000 installing security companies to be legitimate systems integrators. The rest would be more security or alarm dealers.
Well, that's of course unacceptable (and insidious on Sarah's part - ho hum, Scott thinks you're wrong by about 100 percent). One of us has to be a little more right than that! We're thousands away from each other. A full order magnitude away from each other. And neither of us put any rigor into our estimates whatsoever. So here's what I tried by way of putting a little rigor into it. I'm happy to listen to why my analysis sucks, and why you have a better answer:
Okay, I'm not sure about integrators, but here's at least a starting point for security installers: California, the most populous state, has 2,047 licensed alarm companies, which equals one company for every 17,953 people New Jersey, the 11th most populous state, has roughly 1,200 alarm companies according to the NJBFAA, which equals one company for every 7,250 people (or so). If you figure the 9 states in the middle are somewhere in the middle of those two states, and we'll go on the low side at 1,500 per state, you come up with a total of 14,900 alarm companies (or so) for a population of 173,100,000, which equals one alarm company per 11,617 people. If you take that rate of one company per 11,617 people and apply it to the 304,000,000 population of the United States as a whole, you get a total of 26,168 alarm companies for the United States as a whole. I like that number because it makes my guess of 25,000 look smart. Further, if you look at California's numbers, there are 13,423 employees for those 2,047 alarm companies, an average of just 6.5 per company. It seems hard to believe that a true integrator could have fewer than 15-20 employees, so here's some more math: If 50 percent of the companies average 3 employees (true trunk slammers), that would leave just about 10,000 employees for the 1,025 companies remaining (if we're averaging 6.5, it makes sense that half would have about 3 and the other half would have about 10). If 50 percent of those companies average 7 employees (another spot in the middle), that's 6,400 for the remaining 513 (25% of our total) or so, which average about 13, which is getting closer. So, if you go with a quick and dirty estimate that 20 percent of companies have 15 or more employees and thus could likely be expected to do commercial work of some caliber, and you apply that to the national number of 26,168 that gives you a total of 5,233 or so commercially focused companies (loosely categorized as integrators) in the United States. That's at least not a wild guess.
Please note that I would have gotten the exact number of licensed alarm companies from the state of New York but you had to make the request via fax and I simply refuse to use a fax machine for any purpose whatsoever. Whaddaya think?

Neat surveillance stuff

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Tuesday, August 11, 2009
So my fearless editor Sam forwarded a release on to me from MobiDEOS (though the one linked here is from Iveda) about a partnership with Iveda Solutions that could allow just about anyone with a cell phone to enjoy interactive access to their cameras for 24/7 viewing from anywhere in world. Pretty cool stuff. Of course, my particular model of LG phone doesn't support MobiDEOS' MobileCamViewer, which makes it all possible. I mean, I wasn't really considering trying this whole thing out, since I don't have any surveillance cameras or CCTV systems at my disposal... Then I read that Webcams are included in this everyday Joe surveillance solution, and that the MobileCamStreamer could be downloaded for free. Running this, I could (if I had an iPhone) log onto my laptop at home, which I leave running all day, and see a view of whatever my built in Webcam is seeing... My laptop becomes a sort of low-cost surveillance system. pretty cool. Of course, being able to log on and see the person who breaks in to steal my laptop doesn't really aid me in any way... But if I want to spy on my family, then this is right up my alley. I'm working on a story about all of this, so keep your eyes open.

An alarm system Paper Moon

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Tuesday, August 11, 2009
Can I tell you, my inbox is getting spammed with Google Alerts about marauding bands of summer-model sales people. Seems they're creating havoc with their "scams" and "con men" from Baltimore to Hawaii and every little Texas town in between. I don't mean to make light of the problems of deceptive sales tactics used by some of these sales people, but I do like the gangster (I use the term in the 1920's sense) lingo used in these stories. Makes me think of that old Ryan O'Neal movie. 124117__papermoon_l1 Here's a smattering of "con artist" stories from today: Con men in Hawaii--MAX Alarm is the company named. I've never heard of them, but going to call David Leavitt, one of the owners listed here to see what he's got to say. After the dust-up in Nagadoches, Texas, Apx salespeople are in hot water next door in Lufkin. Got an email into Stuart Dean to see what he has to say about this. And on the East Coast. No company is named, but this alert says the security systems scam artists are out in full force in Baltimore.

Commissioner Bratton avoids poorhouse: Whew!

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Tuesday, August 11, 2009
Linking to the New York Daily News makes me feel a little icky, but this was too good to pass up: LAPD Commissioner William Bratton is leaving to join security company Altegrity. Why? Well, for the money, of course:
He said he was about to get hit with a big interest-rate bump on the seven-year adjustable mortgage on his Los Feliz home. "Despite you paying me very well, I would be literally in the poorhouse," said Bratton, who makes $300,442 a year with the LAPD.
A: I hate it when people use "literally" wrong. He's not "literally" going to be in the poorhouse. He's "literally" going to be poor. If he was "literally" going to be in the poorhouse, he would "literally" be cuffed and confined to a prison for debtors. I'm guessing that would never actually happen to the head of the LAPD. Maybe I'm wrong. Also, one might ask (so I will) if we want a guy who's too dumb to figure out that an adjustable rate mortgage is a bad idea to be running the LAPD/NYPD/engaging-in-"nation-building" (that's his new job). But that would be unfair, since he obviously never had any intention of staying in LA long enough for that ARM to kick in (that's why he got an ARM in the first place). Good luck selling the place, Billy. Not that I really care. I don't live in LA. LA in Maine means the great co-existing cities of Lewiston-Auburn, side-by-side across the Androscoggin River. At about 45,000 people, they make up the second greatest concentration of people in this lovely state. Anyhoo, I would also like to point out that this Altegrity joint may be great at training law enforcement and doing background checks, but they seemed to be grammatically challenged. Their motto is: "We help our clients Make Decisions Smarter." Um, huh? If they wanted to go with "Make Smarter Decisions" I could live with that. Still kind of clunky, but okay. I mean, smart is really an adjective that should modify a sentient being, and really shouldn't be applied to an abstract noun like "decision," but I can see how people call decisions "smart," even though really it's the person that made the decision that's smart. No big deal. But this whole "Make Decisions Smarter"? At that point, you're really modifying the verb "Make," and you really want to use an adverb for that, like "make decisions more smartly," or something, which is admittedly clunky but is at least grammatically correct. Or, even worse, you could infer that "Make Decisions Smarter" is somehow implying that they'll retroactively make decisions smarter after the fact or something, which doesn't make a whole lot of sense unless they're saying that they can fix mistakes, but I don't think that's what they're saying. How about "Make Better Decisions"? Isn't that what they're going for? I'd be really curious as to how that marketing decision came to be. I'm guessing it was really "efforted."

CIT update

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Tuesday, August 11, 2009
You can go here for why it matters, but the short story is that CIT looks to be headed for bankruptcy after all.

Monday morning, you sure look fine

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Monday, August 10, 2009
You fire up the email and what do you get in your google alerts? This: Normally, I think these things are just stupid, but this one creeped me out for some reason. Obviously fake, but well done, I say. Well done.

Emergency management dudes: Got this App?

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Monday, August 10, 2009
iphone-toting emergency management professionals will be psyched to learn that there's an App for NFPA 1600. Didn't I tell you that Lorraine Carli and her communications team at NFPA are a hip bunch? Here's a news release with the details.

But can he get me through Vegas traffic at ISC?

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Friday, August 7, 2009
It's Friday, the sun is shining, and I'm trying to get everything I need to get done in time to get out of here at a reasonable hour, so, no, you're not going to get anything particularly deep today. Sorry. However, how cool is it that Ryan Boggs, installation manager for Richmond Alarm Company, got written up in the hometown paper for his exploits as a race car driver? Tell me this guy doesn't look pleased as punch with his life: Also, it's now sort of my life ambition to work for either the Goochland Gazette or the Midlothian Exchange. Also the Powhatan Today might not be bad. Damn if those aren't great names for papers. Let me know if you win one, Ryan, and I'll buy you a whiskey in Vegas.

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