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Pro One revenues and net loss up

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Thursday, May 15, 2008
Here's a local newspaper's take on Protection One's latest earnings. (P1 is based in Kansas.) The good news is that total revenue, RMR and adjusted EBITDA are all up from 2007(thanks in large part to the company's merger with IASG), however, the company's net loss is also up. Protection One attributes this loss to the cost of the IASG merger and the cost of refinancing its $110 term loan. And here's the official P1 first quarter earnings press release a local newspaper's take on Protection One's latest earnings.

Meshing around in Richmond

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Wednesday, May 14, 2008
I'm here in Berkeley, California, arrived yesterday actually, for an ADT media event. Today we spent most of the day in the city of Richmond (pictured above) which is not far away from this hip college town, but it's very different. An important shipbuilding port during WWII, Richmond is a diverse city with considerable challenges in terms of the crime and security. We spent the day checking out their new public security camera system and talking to the municipal people involved. Actually there are two security systems that can be connected in future. One is in the city and was installed primarily for crime reduction, vandalism and to curb illegal dumping of waste. The second is in the Port of Richmond and is part of its homeland security initiatives. The $4.5 million project include 116 fixed and PTZ cameras (Axis cameras using analytics by Object Video) built on a BelAir Networks mesh network. "One of the highest capacity mesh networks in the country," according to Craig Reed of ADT. Interesting, I thought, that this project all started at the local level. A group of Richmond citizens concerned about crime came to a City Council meeting and said they thought cameras should be installed in the city. They weren't looking for far-ranging high technology solution--just a deterrent to crime. Yet the outcome of those citizens' initiative is an impressive installation that has capabilities (presently and in the future) for a whole range of functions including a citywide emergency system. (Remember the tragedy in Minneapolis with the bridge collapse? The Minneapolis mesh network was key to emergency personnel, government workers,and others being able to communicate during that time. Richmond's mesh network comes from the same vendor--BelAir Networks.) The city and ADT have done an impressive job bringing all the relevant experts and concerned parties (the ACLU for example) into the process, and doing it early. Smart politics. Tomorrow we'll hear from Sir Chris Fox, (yes, he was knighted by Prince Charles) president of the Association of Chief Police Officers in the U.K. He's going to talk about issues surrounding surveillance cameras in public spaces. Fox helped coordinate national police operations in response to the terrorist bombings in London in 2005 and the deployment of 8,000 officers to Scotland for the G8 conference. We've got a great view of San Francisco from our post here in Berkeley, and tonight we're heading across the bridge to grab a bite in that fine city. On my favorites list, it's second only to Portland, Maine.

NBFAA ally Fossella may resign from Congress

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Saturday, May 10, 2008
Facing demands for his resignation, New York Congressman Vito Fossella—a Republican from Staten Island who has worked with industry groups such as the NBFAA in the past is expected to decide this weekend whether to stay or go. The photo below is from December 2005. Fossella (center) with David Martin of Wagner College (right) and Fire Chief John Bambury of the 8th Division as he announces new legislation to help prevent college fires. Things went from very bad to a lot worse for Fossella in the past 10 days. Here's an AP story from today. Last week he ran a red light in Washington, D.C., was stopped and charged with drunken driving. According to the New York Times, he said he was going to pick up his daughter. In the next few days, it was revealed that Fossella—who has three children and a wife in Staten Island—also has a mistress and three-year-old daughter in Alexandria, Virginia.

One word: Tape

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Thursday, May 8, 2008
Remember in The Graduate when Dustin Hoffman gets that sage advice from one of his dad's friends: "One Word: Plastics." Here's a refresher: That scene is what came to mind today when I saw this story about the "newest trend in home security." Guess what it is? one word: Tape. According to this story, there's a great future in tape. Big honkin' sheets of tape that you put all over your windows. It makes 'em harder to break. You could use it for cars too. Think about it.

PSA-TeC, day 2

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Wednesday, May 7, 2008
Today was PSA-TEC's trade show day, where about 100 vendors showed their wares. It's like a maxi-boutique atmosphere, as it's a fairly large show floor, but all of the booths are pretty low-key and the only people attending are integrators, since there's really no residential presence in PSA and there aren't any end users here. So it's all business, which is a good thing. Very high-level conversations, and a good amount of time to talk. Here are some of the salient points: This is party because I think a lot of the attendees blow off the trade show part a little bit. They've been busy with the trainings, we just had a big party last night where there was a significant amount of free booze (I also , and this is the hump day of a long conference where they can relax. The morning rain probably kept a number of them off the golf course, but the traffic the show hall was still a bit light in general. Everybody congregated for lunch, though, and that was a good crowd with a full room. Normally I'd give you the details of the lunch-time presentation, but I gave it, so I'm going to go one step further and actually post here my presentation (I did it in iWork's Keyone, so I can export it as a quicktime file, with slides moving every 10 seconds - that may be too long for some of you, but I can assure you it's not more than five minutes). My talking would certainly improve the experience, but I couldn't figure out a good way to do that in iMovie. Maybe I'll try again when I have more time at home and post a presentation with sound next week. Anyway, the gist of the presentation is that integrators need to add more recurring revenue to their businesses, and you've read my remonstrances on that front a number of times if you're a loyal blog reader. The sexiest part of the presentation is in the middle where I compare the SST and HSM buys by ADT and Stanley, respectively. Note the fact that both had roughly $200 million in revenue in the year prior to their purchase, but, due largely to the fact that 11 percent of SST's revenue was recurring and 50 percent of HSM's was recurring, they sold for $187 million and $545 million respectively. You'll see their EBITDA margins compared, etc. Also note at the end of the graphs that some might say Stanley got the better deal, as they only paid 60x RMR for HSM, while ADT paid 89x RMR. It's just one way of looking at a deal, I realize, but interesting nonetheless. So, here it is. I'd appreciate feedback on it if you can glean some of the point.

In a jamb

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Tuesday, May 6, 2008
So, I just happened to come across this "security" product (and, you're right, this has nothing to do with monitoring). The product is called Door Jamb Armour and it's advertised as a way to repair broken door jambs following a break-in and also a way to secure your door to prevent future home invasions. Interesting. The company's Web site includes this line: Intruders know that kicking in the door is the easiest way into your home. I guess. Breaking a window must be a close second, though. Regardless, this product could certainly be considered a deterrent to a very lazy thief, but I hardly think it warrants the company's logo: "Because you can't afford false security." Frankly, without any kind of security system to detect that, say, someone's trying to kick down your door, I'd say that Door Jamb Armour isn't exactly providing me worry-free nights.

Maybe they're hiring?

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Tuesday, May 6, 2008
A new integrator has popped up in Playa del Carmen, to serve the burgeoning real estate market along the Mexican Riviera. Seems like maybe that's good work if you can get it. “Many foreign investors and homeowners have to date not been too concerned about protecting their properties with security systems due to feeling safe within gated communities with private security guards” says Advanced Security Systems founder and owner Anthony Spadaro. “These measures have however not been successful in preventing homes from being burglarized and many home owners are now looking to find alternative solutions to protect their properties” Mr. Spadaro continues. Okay, so maybe Spadaro and ASS aren't so up on their comma use, but I like their business plan. As the American market cools, and Mexican/Central American/South American currency becomes more valuable, south of the border is going to start looking increasingly attractive. Despite Mexico's economy being tied so closely to the United States, the peso recently recorded two-year highs and the Mexican government is actually selling off dollars. Check out the latest Brink's earnings report. Notice why they posted such a nice bump? Operating profit for the first quarter increased 51% to $97.3 million from $64.3 million in the same quarter a year before, mainly due to strong profit growth at the company's Latin American operations and Brink's Home Security. First, that ain't a bad operating margin, earning $97.3 million on $920 million in revenue, but, second, am I the only one surprised to see the company's Latin American operations being mentioned in the earnings report? There's opportunity there.

Early returns from PSA-TEC

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Tuesday, May 6, 2008
Though events began here yesterday, the meat of PSA-TEC began today, specifically with a six-hour block of programming dedicated to working with the U.S. government. As you can imagine, it was a lot to take in. Here are some of the salient points: First, a note on the economy from John Mitchell, U.S. Bancorp's Economist, Western Region, and the principal of M & H Economic Consultants (no, not that John Mitchell). Much of his presentation focused on the debate over whether we are, indeed, in the midst of a recession. His answer? Probably, maybe. He noted that the factors pointing to a slow growth, rather than a recession - namely a continuing growth in the GDP (even if it's small), the fact that jobless claims have stayed under 400,000, and that industrial production has remained up - are generally outweighed by recession-looking stats like an unemployment rate that's jumped over five percent, the housing decline, consumer confidence being at a 26-year low, and weak retail numbers. He quoted a great line from Barron's: "Recessions are like beer bellies and bald spots. Where exactly they began is hard to pinpoint, but the evidence becomes overwhelming of their existence." So, the question becomes how long will the recession last and what will the recession look like. Mitchell noted that unless you're over 42 (I'm not), you've never really experienced a recession, considering the last two - 1990-1991 and 2001-2002 - were relatively mild and short, just about eight months each. You have to go back to the early 1980s for the last true recession that really impacted people's lives, he said. So, here are the bellwethers you should be looking for: When does the housing problem end? Not only do new homeowners represent new sales, but state and local governments are affected by price drops and vacant properties when the taxes don't flow in, and this affects their ability to invest in security. If losses in home equity continues in Las Vegas, Miami, and San Diego, for example, the effect could be large. What are the implications of the credit crunch? Are there more mines to be felt in the credit industry? For example, if municipal bonds were to quickly be devalued, that would affect government's ability to spend on large projects, like new construction and security. Will current fiscal policy work? Basically, will the stimulus package, the money being sent out these past couple of weeks by the federal government, actually be spent on things that will get the economy moving again? This is tied directly to whether consumers can shrug off the big price increases in staples like gas, flour, rice, and foodstuffs in general. If this causes people to start stuffing the mattresses with dollar bills, the stimulus package is doomed and it's unlikely people are going to be investing in new security systems (though maybe they'll value security higher, feeling like they have more to protect). One other thing he said to look out for: A labor crunch is on its way. Most projections have the workforce aged 16-54 staying relatively flat through 2014. That means a growing economy will not have a growing labor force. Mitchell warned that if technology is not developed to replace jobs in some sectors, there could be a major labor shortage, just as the Baby Boomers start drawing down the Social Security fund and rapidly growing Medicare spending. Good news: Sure, there's some. For one thing, he said, health care spending ought to be "bullet-proof" going forward, so if you're working in that sector, keep at it, and if you're not, start. Also, he said education should be a robust vertical, while retail, especially, could see hard times in the short term. Much of the rest of the time was taken up with discussion of how to actually sell to the government, with much talk about HSPD-12, NIST, the GSA, the GAO, FIPS 201, and any number of other acronyms. This is truly head-spinning stuff. Deon Ford, chief technologist for SI International, a one-stop federal ID shop, doing about $670 million in revenues, helped shed some light on what the government's looking for, specifically a way to tie the vetting of an individual to a credential in a real and concrete way. That's what HSPD-12 dictates and that's what you need to be able to deliver. He thought it important to be familiar with both this HSPD-12 Conversion Mandate and the FIPS-201-1 Conversion Standard. Bookmark those links, people, if you're interested in government work. Also useful links: The NIST roadmap to Information Security Documents A recommendation for the use of PIV credentials in physical access control systems Further, you need to get on the GSA Schedule, which dictates whom the federal government can buy from. The recommendation was that integrators should get familiar with the following schedules: Schedule 84 – 146-60-1: There was talk that there's actually a paucity of integrators who've applied for this schedule, which is for security systems integration and design work. Schedule 84 – 146-60-2 is for security management support services. Schedule 84 – 146-60-3 is for security system life-cycle support, the maintenance on the systems that you sell. There's been some confusion because Schedule 84 is where access control and other physical security has traditionally been located, but HSPD-12 has been seen as on the IT side, which is Schedule 70, where the IT integrators live. Those guys don't want to be putting in readers at the door, I can assure you. Another point is that even if you're not on the GSA Schedule, you can team up with someone who is through the Contractor Team Arrangement. For those without a schedule, or with a schedule that's the wrong one, two or more contractors can work together by complementing each other’s capabilities as long as one of them has the correct schedule. Is that confusing? Yes. But check out the www.gsa.gov web site. It's still confusing, but the answers are there if you look hard enough and they absolutely need physical security integrators all over the country.

Security and jaguars

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Monday, May 5, 2008
Here's something Boeing and the Department of Homeland Security likely didn't think they'd have to deal with when they began tackling the Safe Border Initiative and the fence between the United States and Mexico: Jaguars. Seriously, there are jaguars that live in the desert area that comprises much of the U.S.-Mexico border, and there's concern they won't be able to move naturally throughout their native habitat if there's a big ol' fence in the way. Look how cool these things are: Suffice it to say, though, that the government needn't worry itself with the same laws that apply to your company when you're doing installations: Last month the Department of Homeland Security waived 30 environmental laws to finish 470 miles of the fence by the end of the year. ... "We are currently in a lawless situation at the border," says Chertoff. "I feel an urgency to get this tactical infrastructure in. And although we're going to be respectful of the environment, we're going to be expeditious." I'm sure Chertoff's definition of "respectful of the environment" is slightly different than that of any number of environmental organizations. Yep: "National security and environmental protection do not have to be at odds with each other," says Defenders of Wildlife spokesman Matt Clark. "If we can drop this arbitrary deadline for constructing the fence and go through the proper procedures, then there are inevitably ways to minimize environmental impact, but as it is now it's throwing all of those laws out the window." Gotta say I'm going with Clark on this one. For one thing, that fence may very well slow down illegal immigration, but I have to say I'm concerned with throwing laws out the window in the name of national security. Is water quality affected? Pollution control? Emissions? Let's not go putting American health in danger in the name of keeping them safe. A little paradoxical, no? Just look what rancher Warner Glenn is willing to sacrifice: "I'm a livestock rancher, but I wouldn't mind donating a few calves to that jaguar, so to speak." By the way, I'd like to have heard a word from big John McCain on this one. It's has backyard, right? Where's he stand on jaguar rights?

A case for video in the home

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Sunday, May 4, 2008
Well, as it turns out, this story from a CBS station in Philadelphia isn't as much about residential CCTV as a I hoped, but boy is it entertaining! Yes, it's yet another story about someone with a security system where the alarm company/integrator isn't mentioned. Yes, it's another story where they're talking about digital video but still use the phrase "caught on tape." No, the video in question isn't actually all that instrumental to a burglar being caught by police. But. You've got to check out Robin Pearlman, the woman who chased a burglar from her home, got down his license plate number and gave it to the police, who then arrested the bad guy. This woman is very impressed with herself (for good reason), alternatingly referring to herself as "Rambolette" and a member of Charlie's Angels (apparently she hasn't consumed much popular culture in the last 25 years or so). Great east coast accent, too. Oh, right, I'm supposed to be making a point about the security industry. Please note that the woman is very matter of fact about her residential security cameras. Nice sales tool. Privacy questions? What privacy questions? Everybody has CCTV in the home now. Even housewives in suburban Philadelphia.

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