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Sex and security systems

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Wednesday, June 18, 2008
LaserShield's massive marketing campaign hit daytime television audiences recently when it was featured on The View as one of several products promoted by Dr. Gadget (you know, that slightly crazed, high energy product promotion guy). Here's the YouTube link: Other than the star power of Dr. Gadget, I'm sure the ratings for that particular episode was fairly high as Sarah Jessica Parker was the featured guest and the Sex and the City movie was hot! So now stay-at-home moms, retired folks and Sarah Jessica Parker fans all over the country will be wanting a LaserShield system. Or that's the hope anyway. And, in typical daytime talk show fashion, everyone in the audience went home with a LaserShield system, too. LaserShield is all over the place lately. I heard an advertisement on XM Radio a few weeks ago and I'm sure they're using all sorts of other advertising channels, too. You don't typically hear about security in your day-to-day activities, but then again, LaserShield isn't exactly typical.

Now this is how you do media

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Wednesday, June 18, 2008
I've often harped here that security companies need to do a better job of using the media for their own devices. Far too often, criminals are apprehended with thanks to "the security company." But this news report shows you just how the media can get a good story at the same time you get a fine sales tool. And because it's being done by an independent news house, iVerify and ioimage get great validation. No doubt other construction firm owners were quickly googling the two firms after seeing this: It's funny, because this kind of site security seems so obvious with today's technology, yet a phone conversation I had with the people at Vidient has made me think about where the market is really at with analytics and perimeter protection. Vidient has decided to focus on the perimeter security market for its analytics product, generally to the exclusion of other applications. I asked why they would want to limit themselves in that way, when integrators are perfectly capable of coming up with interesting applications for their technology. Vidient sort of disagreed, saying that most integrators needed to be shown how and where to use the analytics, and pointing out that very few new sites are using analytics and video for their perimeter protection. I'd love to see numbers, though I doubt they exist, of how many new facilities are using things like motion detectors and trip wires to the exclusion of analytics and video. Is it true that people still don't trust, or still don't know how to implement analytics for perimeter protection, where it's pretty much a no-brainer? Or does Vidient underestimate the market's advancement?

That's one way to get business

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Wednesday, June 18, 2008
Sorry to have been away for a few days, loyal blog readers. I took a family vacation to Columbus, Ohio (don't ask why), and then got stuck in Columbus, thanks to US Air's typical crappiness. Seriously, is there a worse airline than US Air? I think not. Further, I'm slightly distracted today thanks to the glorious Celtics victory that went down last night. I watched all 18 of their 18 straight losses last year, so feel extra deserving of some gloating this year. Also, I'm a typical Boston sports fan and am just generally a jerk about such things, so here's a nice photo for y'all (that's Celtic coach Doc Rivers, whom I've called lots of nasty names over the years, in front of long-time Celtics icon Red Auerbach): Thus, my blog entry for the day is a whimsical tale from Scotland of "a security company enforcer who threatened people to get contracts for her firm." That's one way to drum up new recurring revenue. But it gets better: Heavily-built Marion Lang, 50, had earlier been found guilty on three counts of extortion after a nine-day trial. I love how she's "heavily built." As though a small woman couldn't burn down your house or shoot your dog.

Clarification on arsonist's message sought in Texas

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Tuesday, June 17, 2008
Maybe I should just do what the bumper sticker tells me and not mess with Texas. You know, hit delete like others, who really don't understand how they do things down there. Problem is: I can't delete because this story just keeps getting weirder and more interesting. You know the story: the Texas governor's mansion—which was undergoing renovations including a delayed sprinkler retrofit—was torched by an arsonist about 10 days ago. It subsequently came out that the security system wasn't working properly, and hadn't been for a few weeks. In today's story, the fire marshal surmised that the arsonist was mad about the governor's stance on something, like maybe the death penalty, either that or he was pissed about the renovation of the mansion. Then there's an appeal from the fire marshal to the arsonist, “We do feel you had a message and we would like to hear from you.” In case the angry arsonist doesn't come through with a clarification of his message, they've offered a $50,000 reward for info leading to his arrest.

Security system on the fritz during fire at Gov's mansion

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Monday, June 16, 2008
Does this Texas tale sound just a tad fishy to anyone else? Last week an arsonist set an early morning fire at the Texas Governor's mansion. The mansion was unoccupied because it was undergoing renovations. News reports said that a new sprinkler system had been at the top of the list of renovations, yet eight months into the project, that task had not been completed. In this report, we learn that the security system that protected the mansion (and was monitored by guards on site) hasn't been working lately.

S.C. Gov. vetoes sprinkler bill

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Friday, June 13, 2008
IN a big blow to sprinkler advocates who have been working on an incentive bill here and on the national level, South Carolina Gov. Mark Sanford waited until the last minute to veto a sprinkler bill that would have provided tax incentives for homeowners and businesses to retrofit with sprinklers. The bill was sent to the governor's desk last week after passing the state senate. He had until June 11 to veto or sign. Had Sanford not signed or vetoed the bill, it would have automatically become law on June 12. Reports said the governor objected to the amount of the incentive (25% from the state, 25% from the local government) calling it more of a "subsidy" than an incentive to invest. The Legislature will reconvene June 25 to take up the governor's vetoes. At that time the Governor's veto could be overridden by a two-thirds vote. If not, the issue is dead until January.

Honeywell sells off a unit

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Friday, June 13, 2008
Honeywell ought to have some more cash on hand. It's not really security related.

Home security systems of the Fortune 300 CEOs

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Thursday, June 12, 2008
This chart is from a Wall Street Journal story about how much money Fortune 300 companies spent to keep their CEOs safe. There's quite a swing here. In one hand you've got companies like Valero Energy, which forked over a mere $239 for monitoring fees for CEO William Klesse's home security system. At the other extreme is Limited Inc., which spent $1.25 million to protect CEO Leslie Wexner. This total reportedly includes security for Wexner's 22,371-square-foot home on a 300-acre estate and "other homes and a yacht." It also includes use of a corporate jet, which the company requires.

Stanley to buy Sonitrol

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Wednesday, June 11, 2008
Well, we told you they were back in acquisition mode. Stanley Works announced just now an agreement to acquire Sonitrol for $275 million, at the same time they announced an agreement to sell off CST/berger laser leveling and measuring business, based in West Lafayette, Indiana, to Robert Bosch Tool Corporation for $205 million. Busy, busy. Here's the official press release (it's long and dense): STANLEY WORKS ANNOUNCES SALE OF CST/BERGER FOR $205 MILLION AND ACQUISITION OF SONITROL CORPORATION  FOR $275 MILLION (sorry, many press releases shout and I was too lazy to retype it) Also Plans To Prune Several Small, Non-strategic Product Lines During The Remainder Of 2008 New Britain, CT, June 11, 2008: The Stanley Works (NYSE: SWK) today announced that it has entered into an agreement to sell its CST/berger laser leveling and measuring business, based in West Lafayette, IN, to Robert Bosch Tool Corporation for $205 million.  This operation had 2007 revenues of $80 million (excluding certain European sales of approximately $10 million), primarily in North American construction-related markets.  The transaction, which has been approved by the Boards of Directors of Stanley and Bosch, is subject to regulatory approvals and other customary conditions, and is expected to close during the next several months at which time the company expects to realize a pre-tax book gain totaling $138 million.  Net after-tax cash proceeds from the sale are expected to approximate $155 million. We've heard in the past Stanley is looking to get away from revenue stemming from product sales and emphasize recurring revenue. In a separate transaction, the company also announced that it has entered into an agreement to purchase 100% of the shares of Sonitrol Corporation from an ownership group comprised of Carlyle Venture Partners, Wachovia Capital Partners and Spire Capital Partners as well as selected members of Sonitrol management for $275 million cash (approximately 10x EBITDA). Sonitrol, headquartered in Berwyn, PA, provides security monitoring services, access control and fire detection systems to commercial customers in North America via two monitoring centers and a national multi-channel distribution network. Sonitrol, the 8th largest electronic security company in the U.S., brings a strong brand, unparalleled capabilities in audio-verified monitoring and a substantial national account base to Stanley’s Convergent Security Solutions platform.  Sonitrol, with revenue totaling approximately $110 million will report into Stanley’s Convergent Security Solutions business which had 2007 revenues approaching $600 million.  The Boards of Directors of Stanley and Sonitrol have approved the transaction, which is subject to regulatory approvals and other customary conditions. The acquisition is expected to close during the third quarter of 2008. Have to admit I just read that Sonitrol was for sale on Jeff Kessler's blog, which is now a must-read, considering his in-depth knowledge of the industry and now being released from Lehman Brothers' lawyers' shackles. However, you'll notice I had this here news posted first... John F. Lundgren, Chairman and Chief Executive Officer, commented: “These two transactions are important steps toward advancing our growth strategy and repositioning the company to be less dependent on construction and DIY markets.  We continue to be strongly committed to shifting the company’s portfolio into higher-growth, higher-return areas such as electronic security.  The addition of Sonitrol, with its iconic brand and strong franchisee and direct sales network, expands the scale of our existing North American monitoring operation, increases our recurring revenue and adds breadth and depth to our electronic security product offering.” Exit of Several Small, Non-Strategic Product Lines In addition to the two transactions announced today, the company is developing plans to exit several small, non-strategic product lines during the remainder of the year with associated revenues of approximately $60 million. Assuming that these exits are accomplished through discontinuation or sale at various times throughout the year, their results will be reclassified to discontinued operations for the current and all prior periods in accordance with generally accepted accounting principles as events transpire.  Details of these exits will be communicated as necessary after plans are finalized and/or transactions occur. ...boring stuff... John F. Lundgren, Chairman and Chief Executive Officer, continued: “The portfolio transformation which we embarked upon several years ago is a key element of our overall strategy and includes both acquisitions and the occasional disposition of businesses or product lines that are inconsistent with our intended direction.  As the portfolio reshaping has progressed, the company has become stronger and more capable of delivering sustainable earnings and cash flow growth.  Today’s announcement reinforces our firm conviction to continue with this strategy.  Challenging economic periods like these often present opportunities.  Our acquisition pipeline is robust and our ability to create value by allocating capital to acquisitive growth and/or share repurchase is strong.  We continue to operate the company within the boundaries of our upper-tier credit ratings, a strategy which has served us well over the years and will continue to do so. “ Additional Information About Sonitrol Sonitrol, a market leading independent U.S. commercial security company, had 2007 revenues of approximately $110 million.  Sonitrol is well positioned for growth given its integrated suite of security solutions, its established brand and respected reputation and its national multi-channel distribution network.  Sonitrol, an industry leader in apprehension rates, maintains one of the lowest false dispatch rates in the market, and is a leader in verified audio monitoring services. Recurring monthly revenues (“RMR”) from commercial monitoring activities represents an important element of Sonitrol’s annual revenues; additional revenues are generated from security system and equipment installation, repair services, proprietary equipment sales and royalty fees generated from Sonitrol’s franchisees. A one-time installation fee (including the cost of equipment) is billed at the commencement of customer security contracts. Additionally, monthly monitoring fees are charged over the life of contracts, for which a typical initial length is five years, and service fees are generated from repairs that are not covered by warranty. Yeah, I think Sonitrol does pretty well and did pretty well for its investors. Getting $275 million for $110 million in annual revenue isn't that far away from Stanley paying $545 million for the $200 million HSM brought (both deals are in the 2.5-2.75x annual revenue, 10-12xEBITDA, 50-60x RMR areas, with Sonitrol a touch lower than HSM in all of those categories). I'm guessing Sonitrol are similarly doing about 50 percent of their revenue in recurring and that their gross margin is somewhere around 30 percent, maybe higher. I'll get some more on what's happening with the brand, whether HSM is going to keep the residential accounts, and what's up with the franchises soon. I'm going on a little vacation starting tomorrow, though, so it might take a bit.

Can't say I'm overly sympathetic

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Wednesday, June 11, 2008
Certain of us northeasterners won't exactly be crying for the New York Football Giants, now that they've had their Super Bowl rings stolen. Ha, ha. The thieves disabled the alarm system at E.A. Dion Inc., cut a hole in the roof and made off with a safe that weighed at least 1,000 pounds. The loss was discovered Sunday by a Dion employee, who went to the business when she was unable to access her work e-mail from home, apparently because phone lines had been cut. The heist could have taken place at any time over the weekend, Sgt. Jim Keane said Wednesday. Well, I don't think it was the phone lines that were carrying that employee's e-mail messages, but you get the idea. Maybe there should have been a radio back-up? How is it possible there wasn't one? Unfortunately, only the Giant staffers got hit by this one. The players received their rings already. Bummer. And you conspiracy theorists out there, go ahead and get started. The company is in Attleboro, Mass., which is quite possibly the single greatest concentration of Pats fans in the world. Can you say, "Inside job"?

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