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Chipmaker's forecast speaks to downturn

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Monday, December 22, 2008
I'm not sure how many people are aware of Techwell, a chip-maker who's got product in (according to them) 70 percent of DVRs. They drive the playback engine, essentially. You can read about their HD play here. Anyway, they announced last week new revenue projections that speak to a significant slowdown in security surveillance sales. The numbers are somewhat irrelevant. Here's the nut graph: "Several of our larger security customers in Taiwan and China have pushed out orders in the last two weeks as a result of a build-up of inventory in their factories," said Hiro Kozato, Techwell President and CEO. "It is clear the current economic environment is impacting our core security business as well as our automotive and consumer businesses. However, we remain confident in our long term business prospects. Our design activity with our recently announced TW2880 HD Controller is strong and we believe that our product portfolio, profitability and significant cash balance will help us successfully manage through the current economic challenges." A build-up of inventory in the factories isn't a good sign. Product isn't moving, isn't being installed, isn't being sold. The chip-makers are at the beginning of the pipeline and when the slowdown hits them, it means it's hitting everyone.

CIA Security wins CSAA Five Diamond Cert

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Friday, December 19, 2008
The CSAA announced in late November that yet another central station had achieved Five Diamond Certification. Commercial Instruments & Alarm Systems, Inc. of Fishkill, N.Y. earned the certification by putting 100% of their central station operators through the CSAA's Central Station On-Line Operator Training Course. The training courses cover virtually all phases of central station communications with customers, law enforcement, fire and emergency services communications centers. In order to achieve Five Diamond Certification each and every operator must have not only passed the course, but demonstrated: proficiency in alarm verification, which helps reduce false alarms; proficiency in communications with public service answering points, such as 911 and other emergency responders; knowledge of electronic communications equipment, including radio; an understanding of the codes and standards of such organizations as Underwriters Laboratories, the National Fire Protection Association and others; as well as proficiency in the area of emergency preparedness under a wide scenario of possibilities. There are approximately 2,700 central stations in the United States, which communicate and interact with the law enforcement, fire and emergency service agencies. Of this group, fewer than 100 centrals have achieved Five Diamond status. Intrigued by this training offering from the CSAA, I decided to check it out and am in the process of undergoing the Central Station Operator Level One online course now. The training is administered by the CMOOR Group. CMOOR principle Chris Moorhead spent some time on the phone with me and made sure I was ready to go. Interested central station managers can check out the offerings and demo the course for free.

Panasonic to buy Sanyo

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Friday, December 19, 2008
Well, it looks like the rumors and speculation had merit: Panasonic has made a formal offer to purchase Sanyo. Not surprisingly, the WSJ doesn't mention either company's security divisions, as they are small pieces of a very large puzzle, but I found this paragraph particularly interesting: For Panasonic, the deal comes down to Sanyo's green technology products. Sanyo, the world's largest producer of rechargeable batteries for laptop computers, digital cameras and mobile phones, is poised to capitalize on the auto industry's shift to hybrid and electric cars. Maybe people remember Sanyo's solar-powered "green" cameras at IFSEC 2007? I'd of course love to see Panasonic embrace green practices in the security industry as part of this greening of the company in general. Still, this deal isn't exactly done yet: Panasonic said it will commence by the end of February a tender offer for Sanyo shares at ¥131 ($1.50) each, a 4% discount to Sanyo's Friday closing price of ¥136. Panasonic plans to issue up to ¥400 billion in debt from next year to finance part of the acquisition. A lot of things can happen between now and February.

Enhanced call verification becoming the norm

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Thursday, December 18, 2008
I wrote a story last month that appeared on Security Systems News' newswire, and which will appear in our next issue. The story was about the Seattle Police pushing for compliance to the city's municipal code, part of which requires the use of enhanced call verification. In Seattle, beginning the first of the year, central stations will be required to make two verification calls to alarm owners to ensure the alarm is real as opposed to false. Just Tuesday (Dec. 16), I came across another story from the Star News online about the city of Elk River, Minn. recently adopting an ordinance requiring enhanced call verification as well. Police from both Seattle and Elk River point out that the new two-call-to-the-end-user requirement is part of a much needed false alarm reduction endeavor.

And you thought my video was silly

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Thursday, December 18, 2008
I know I'm a little late to the party on this, but if you haven't seen the video that Hitachi is using to promote its "Dawn of the Tera Era" you need to check it out right now. It's the trippy-est thing I've seen since we threw on the original animated Lord of the Rings back in college. Especially if you grew up on Schoolhouse Rock, as I did, this is just about the perfect mix of nostalgic schlock and simply mind-blowing silliness. But, hey, I guess you come away knowing just how big a terabyte is. And, yes, Hitachi is using this video as part of its pitch for "surveillance optimized" storage. Oh, and as a little early Christmas present from me to you, here's Hitachi's even better video, explaining perpendicular storage (it's from 2006, but it's got Spanish subtitles, so I just couldn't resist - not to mention that brilliant Bay City Rollers rip-off that comes in at about the 1:45 mark):

You never know who's watching

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Wednesday, December 17, 2008
I saw this story this morning and was reminded that it's probably a good idea to always be on your best behavior, especially in a day and age when surveillance video solutions are becoming more and more widespread. Public building perimeters, private business perimeters, parking lots, street intersections, concerned private citizens... you never know when you'll be the unwitting star of captured video. I blogged last week on courtesy and how we could all benefit from a little more gratitude and a more polite approach, and now I guess I'm saying that maybe if we all acted on our best behavior at all times, acted as though we were being observed--whether by our ancestors, by God, by Karma, by surveillance infrastructure, or by a concerned tourist is up to you--maybe everyone would come out ahead.

This should make IFSEC feel better

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Wednesday, December 17, 2008
IFSEC losing Norbain and Pelco is a bummer. Macworld losing Apple? I'd say that's a crushing blow. Wouldn't want to be in the trade show biz right now. Oh, wait...

Breaking good-deed records

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Tuesday, December 16, 2008
Those summer model alarm companies are sure competitive. The photo above is a moving van full of donated non-perishable food items that Platinum Protection donated to the Community Action Food Bank in Utah County and the Utah Food Bank in Salt Lake County last weekend. Platinum had 400 employees hit the streets on Dec. 12 for a food drive, and their efforts "broke the record for the largest one-day, door-to-door corporate food drive, bringing in a grand total of 34,000 pounds of food," according to this press release that they sent me this morning. From the release: "We have broken the record the last two years as the fastest growing alarm company in the history of our industry by knocking doors," said Jeremy Pixton, a co-owner of Platinum Protection. "This time the record we wanted to break was giving back to those that are in need and doing it by knocking doors. We felt this was a good opportunity to teach our employees the value of giving back." A few weeks ago, I wrote a story about summer-model companies expanding their philanthropic deeds and public relations efforts. In that story I reported that Apx Alarm "had made the largest donation in history to the Utah Community Action Service Services Food Bank." This is the kind of competition I can appreciate, and I'm pretty sure that Apx will up the ante again. I'm thinking Josh Houser's going to call me this afternoon to let me know what Apx is doing next. How about you non-summer sales model companies? Let me know what you're doing along these lines as well.

A good time to buy

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Tuesday, December 16, 2008
As I wrote in my preview of the finance special report last week, most lenders are of the opinion that now is a great time for strong companies to take advantage of the down market and roll up some smaller firms with an eye toward expansion. They're looking to lend to companies with a strong balance sheet, so you can find some financing if you need it, but they also say it's a good time to take cash you might have on hand and invest it in gathering up more RMR, or, alternately, cash out some RMR to make some capital investments that will allow you to gather more RMR still. Looks like this isn't contained to the security industry. Here's an interesting article from the Boston Globe that mentions American Alarm passingly in looking at this phenomenon. The premise is that the market for mid-market acquisitions is hot right now (relatively speaking - it's down, but not down as much), which jibes with the information I've been gathering - in that it's much easier to get a smaller deal done than a larger one, since the days of bit leveraged buy-outs and the like are pretty much over with for the foreseeable future. I think this line of thinking applies well to security: "You can pull your horns in and wait for the storm to go by, or you can go out there and act," said Dale Calder, the chief executive of Axeda Corp., a Foxborough maker of diagnostic software for medical gear, data storage equipment, and automated teller machines. "If you're a buyer in this economy, there's some pretty good deals to be had." The question is whether we'll see an aggressive buyer like Stanley start gobbling up mid-sized players, or whether those mid-sized players will start consolidating among themselves and picking up smaller firms. Or both, I guess. But I'm leaning toward the latter. I expect ASG to be very aggressive in this market, along with Security Networks (which closed on a big credit facility this summer, so has the cash on hand), Per Mar, Guardian Protection, ADS, Dakota, and the like. It could also be a good time for some of the larger independent commercial/government integrators to pick up talent and customers, like Adesta, Convergint, NAVCO, etc. Finally, like the firms in the Globe article, smaller manufacturers might decide this is a good time to get out and sell themselves to larger companies with cash on hand or similar-sized companies who aren't in the red, in a "merger" scenario where everyone keeps their jobs. This also jibes with what I'm hearing: "We're seeing a crack in the ice," said Gail R. Long, the chief executive of the Boston chapter of the Association for Corporate Growth, a group representing midmarket merger professionals. "If companies have capital, this is a great time to make strategic acquisitions. And plenty of small banks and nonbank lenders are getting deals done." Finally, there's the capital gains question that looms over all of this. Will be see a small surge of sales right before Dec. 31 and people look to cash out and avoid an Obama-led capital gains increase for 2009? We'll see. That would certainly make things more interesting around here. The news biz is currently pretty slow.

Why it's so hard to find good techs these days

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Tuesday, December 16, 2008
I'm not trying to shame anyone, so I won't say where I found this, but here's a recent employment wanted ad posted by a security integrator: Job opportunity for Electronics Technician Experience: 1. Three years of field experience installing and designing security, fire, access control, computer network wiring, or similar low voltage systems. 2. Knowledge of 120 volt wiring and conduit installation. 3. Computer experience with Windows and computer aided drafting. Education: 1. Degree in electronics or computer repair or 2. Military training in electronics or 3. Company based training programs in electronics with minimum of three years field experience. Restrictions: 1. Individual must have a clean criminal record. An FBI background search will be required for this position. 2. A maximum of three moving traffic violations in the previous three years. 3. Clean and neat appearance. 4. Non smoking environment. Description: Individual will be required to understand electronic circuits and make field modifications for the system to operate within the designed criteria. He or she must be able to read engineering design drawings and build prototype circuits to be used in integrating multiple systems from different manufactures. Install cable, conduit, and electronic devices at the job site and program equipment to perform as specified. Develop CAD drawings for closed circuit TV, access control, and fire alarm systems. Compensation and Benefits: Based on experience, starting pay will be $10.00 to $12.00 per hour. Normal working hours will be 8:00 AM to 4:30 PM Monday through Friday. So, this person has three years of experience installing, has a clean criminal record, has a degree or military experience, and can develop CAD drawings. And you want to pay him/her $10-$12 an hour. That's, oh, say, $20,800-$24,960 a year or so. Maybe you can get to $27,000 with overtime. No mention of benefits. Hey, that's a little over the federal poverty level for a family of four, so not that bad, I guess. Of course, I pay my babysitter $10 an hour. She's 14. Look at that job description above. That person is going to be a major touchpoint with your customer and basically ensure whether the system you put in works or not. I'm thinking you want people who value themselves more highly in that position. Maybe I can see a total rookie coming out of a 2-year program getting that for what amounts to an apprenticeship. But someone with three years already on the job? Is this a sign of the economy? Is unemployment that bad? Am I completely out of touch on this? I made $24,600 my first year out of school as a teacher. In 1996. Seriously. As a teacher. They don't get paid much, remember. Now I know why people are balking at hiring IT professionals to help get into the IP security installation world. I'm guessing the networking guys are looking for more than $25k a year.

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