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Israeli security hits the mainstream

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Thursday, March 13, 2008
Looks like I'm not the only one taking tours of Israel's security infrastructure. Here's a mainstream take from Slate. Of course, I've got some problems with it, but on the whole it's not bad. If anything, it makes me feel a little less special, obviously, if dentists and such can go on these sorts of tours. Anyway, I'd encourage you to read the Slate pieces if you enjoyed my dispatches. They confirm much of my conclusions, but their mainstream (and, I'd argue, borderline sensationalist) take is definitely a different angle.

I'm pissed if I'm Brijot

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Wednesday, March 12, 2008
I knew this would happen. For whatever reason, people have picked up on this ThruVision announcement of its T-Ray technology and turned it into "it's like superman's x-ray vision" and ""it's like x-ray glasses." This is so stupid on so many levels its hard for me to deal with it. Do these morons not realize that we have x-ray technology already? Oh my god, a machine that can see through clothes! That's crazy! How do they not realize that the innovation here isn't that it can see through clothes, but that it's a passive technology, that it receives rays that your body (and everything) emits, rather than bombard you with x-rays, which could be hazardous to your health? This blogger might be the most wrong-headed. She calls her blog "Go Girlfriend," but if she's empowering her fellow female travelers with tripe like this they're probably not all that empowered: Remember those X-ray goggles your brother used to tease you? Remember how he told all his friends he could see "everything" with them, including your polka-dot panties? His dreams may finally be a reality the new ThruVision or "Strip Search" camera. She then recants, saying, essentially, that her use of the word "may" was completely irresponsible, but then she finishes with this nonsense: The technology raises more questions than it reveals though. Does it invade too much personal privacy in the interest of keeping us all safe? How much privacy are you willing to give up to keep terrorism at bay? How does it raise those questions exactly? Because while walking through a portal you'll appear as a faceless blob that no one could ever recognize and if you're carrying a large, concealed metal object someone will be able to tell? You want to keep it private that you're fond of metal chastity belts or something? Afraid it will pick up hidden colostomy bags? This is the kind of muddleheaded reactionary thinking that keeps us from actually paying attention to security. How can you make a privacy argument about this when you allow your carry-on baggage to be screened with an x-ray machine, and your checked baggage to be physically pawed through, every time you travel? The Atlanta Journal Constitution doesn't do a bad job with the story, and even raises the point that the T5000 is designed to spot large objects, and not smaller objects that might be found in a shoe, but the author doesn't bother to ask anyone in the security industry whether this is in any way unique. If the author had asked me, I might have said: "Isn't that what Brijot's been doing for two years?" I don't think its millimeter technology is harming anyone, and its stuff can "see through clothes" from 80 feet away, like ThruVision's can, at least to pick up the giant packages I'm supposed to be impressed ThruVision can pick up. Why isn't anyone making ridiculous reactionary comments about Brijot? If I were them, I'd be pissed.

Diebold comes out swinging

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Monday, March 10, 2008
Sorry I didn't post this earlier, but you can find a copy of Diebold's March 5 letter to UTC here. In no uncertain terms, Diebold Non-executive Chairman of the Board John N. Lauer makes it clear that Diebold isn't interested in being acquired. Here are some choice paragraphs: UTX is opportunistically seeking value that belongs to Diebold shareholders Your $40.00 per share offer is 27 percent below Diebold's 52-week high of $54.50 reached only seven months ago. Moreover, your offer is an opportunistic attempt to acquire Diebold at an inadequate price that does not reflect significant progress against our current strategic initiatives, a U.S. ATM and financial self-service environment that is anticipated to improve in 2009 from recent lows, important opportunities for growth overseas and cost initiatives that are on track to eliminate an initial $100 million from our cost structure by the end of 2008. I agree that UTC is being opportunistic, but can you blame them? Hey Diebold board, if you don't want to be acquired, get your stock price up. It's in free-fall last time I checked, and it's going to get worse if you rebuff this offer. No basis for Diebold shareholders to accurately determine appropriate value As we have clearly stated, given that we are in the process of working to become current in our financial results, there is simply insufficient financial information for investors to assess valuation. Accordingly, we have been unable to provide forward-looking guidance to date. As we have previously reported, the Company is working diligently to complete this process as quickly as possible. Hence, it would be imprudent for us to engage in any change-of-control discussions at this time. We believe that no responsible, objective management team or Board would assert otherwise and have heard from a number of our shareholders in the last few days that share this view. Seriously? Diebold's financial numbers are way late. Not just a little late. If I'm a shareholder, I'm thinking: "Throw us a bone with some good-looking numbers if you want us to believe we shouldn't take what we can get at this point." Misleading characterizations by UTX We take exception to your assertion that UTX has "sought for more than two years to engage Diebold in constructive discussions." This statement is inaccurate and misleading. Prior to your letter dated February 29, 2008, UTX had never made a firm proposal to acquire Diebold. In fact, UTX approached Diebold on only two occasions with non-specific inquiries -- first a brief, informal conversation that took place roughly two years ago between an investment banker (who did not identify his client) and a Diebold Board member; and second, your letter dated February 19, 2008, which referenced a vague proposal without any specific price. Two points of contact separated by two years does not, in our opinion, represent "constructive discussions to increase shareholder value" as you have publicly stated. This is tasty. Particularly for me. I've noted in past posts how certain financial journalists are acting like they knew all along about this supposed two-year courtship. Hogwash. They're just going on UTC's verbiage, which smelled a little funny to me from the outset. If this courtship has been going on so long, how come UTC released nothing older than that Feb. 19 letter? Point for Diebold here. UTC's definitely trying to spin public favor, and the financial analysts, wanting desperately to look insider are buying it. Simply put, UTX's proposed offer is far below what Diebold is worth. Furthermore, your overture, which comes at a time when we cannot responsibly engage in discussions, and the hostile nature of your approach, has convinced the Board that discussions now will not likely result in the best outcome for our shareholders. This is good work on Diebold's part. Even though they come off more than a bit whiny, they've put put all the onus back on UTC. It's passive-aggressive, considering the "time when we cannot responsibly engage in discussions" is pretty much their own fault, but I think it works, and they engage in a little spin of their own: "Simply put, blah, blah." Actually, it's not all that simple. People I've spoken to think the offer is about at one times trailing revenues, which is pretty much what firms in the security space are going for right now. Sure, UTC should be willing to pay a bit more of a premium for Diebold's size, but Diebold is in a tailspin right now, by most accounts, is laying people off, and can't get its numbers out. I'm thinking that damages your value a bit.

Like I'm not going to write about the T-Ray machine

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Monday, March 10, 2008
This story is all over the place, so, of course, I feel the need to comment. Basically, ThruVision has come up with a non-invasive, passive technology for scanning people for hidden weapons, etc. And it does sound cool: Unlike current security systems that use X-rays, the ThruVision system exploits terahertz rays, or T-rays. This electromagnetic radiation is a form of low level energy emitted by all people and objects. These are able to pass through clothing, paper, ceramics and wood but are blocked by metal and water. The system works by collecting these waves and processing them to form an image which can reveal concealed objects. "If I were to look at you in terahertz you would appear to glow like a light bulb and different objects glow less brightly or more brightly," said the firm's spokesperson. "You see a silhouette of the form but you don't see surface anatomical effects." So, let me get this straight: It can find stuff made out of metal and water. 1. Metal detectors seem to work pretty well. 2. So this is for finding liquid explosives? If I'm right with assumption 2, I guess I can see the point of this. After all, anyone who wanted to hide a liquid strapped to an inner thigh could do so at any point right now and walk it onto a plane. But the applications are pretty few - aviation only, right? What are you going to do, stop all people from bringing drinks into public spaces? I'm just not sure this technology upgrade is all that interesting application-wise.

Mircom to open U.S. distribution center

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Saturday, March 8, 2008
Mircom, a Canadian manufacturer of fire alarm systems, will soon have a new locale from which to base its U.S. operations. It's opening up a distribution center in Niagra Falls. The company has lots of customers on the West Coast and in the Southeast, but ultimately decided to stay close to home base in Toronto. This story says they'll be moved into a 12,500-square foot space by this spring. The company has 325 mostly Canada-based employees. They plan to initially hire 12 new workers for the Niagra Falls office. Mircom plans to add light manufacturing at this location, and more employees within the next 12 months.

There's no hiding in NMC's new central

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Friday, March 7, 2008
I had a chance to tour National Monitoring Center's new central station in Irving, Texas on my way to the airport from the TechSec conference last week. It's housed in a brand-spanking new plaza that, when I pulled up, only had one car in the parking lot (which happened to my host, Stefan Rayner, the central station manager's vehicle, still sporting California plates). Stefan gave me a tour of the new facility, which is nearly complete (minus a few pieces of furniture here and there), but won't be completely up and running until early this summer. Stefan explained all the renovations and additions they had made to the building and I even peeked in a currently unoccupied building next door to see how much work they had put into the space. I must say, I was very impressed with the design: from the sleek glass doors that made the space very open and breathable, to interesting features like the electrostatic glass viewing window that can be illuminated to see operators at work (see picture above). Stefan explained this feature was a way to show clients the central station space without distracting operators with continual walk-throughs. Certainly a good idea. Now, I must admit I've only seen a handful of central stations, but this one is above and beyond what is actually required for a central station in terms of design. It currently has 20 operator stations, (with room for at least five more), a roomy break area for operators (although it too is surrounded by glass, so any snoozing, for example, isn't a secret), a training/education room, conference room (that's the one with the electrostatic glass), a large circular reception area and two offices for management, which, by the way, are also surrounded by glass, so the boss can't sneak in any shut eye either. The only thing I would like to see at every central station is some type of exercise space for operators (and at my office, too, now that I think of it).

China Security & Surveillance

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Friday, March 7, 2008
I was cruising around my standard financial pages today, which includes The Motley Fool, a sort of consumer-plus investing strategy site (I probably read it because they print bits of it in my local paper). I was surprised to see a glowing account of China Security & Surveillance, a manufacturer that seems to be way under the radar for the amount of business its doing. Here's the Fool's take: Highly-rated China Security is considered by some to be a stock on sale. The security company is seeing not only rapid sales growth, but consistent profitability without an extreme valuation. The company recently reaffirmed strong guidance for first-quarter and full-year 2008 based on $100 million in new security contracts won in the final quarter of 2007. Despite the optimism, in a market where many companies are increasingly downgrading forward growth projections, China Security trades at a very palatable 8.7 times forward earnings. They did $65 million in 3Q sales in 2007. Did you know that? I never would have guessed they were that big a company. Looking at their growth, they could easily do $300 million in 2008. Where are all those cameras going? How come I never hear of anyone actually installing their equipment? Is everything going into China? If so, why are they listed on the NASDAQ? Edit: My fault - A savvy reader notes that China Security trades as CSR on the NYSE. Find the details here. More from my colleague, Ling-Mei Wong, who's an editor at A&S International Magazine, an English trade publication based in Taiwan. "We have a sister publication in English called China Best Buys, which is based in China. According to their reports (the magazine just launched last year and doesn’t have its own Web site yet), CSST was listed on the New York Stock Exchange last October. It pretty much corners the market for security, being very aggressive with manufacturing mergers. (From a draft of my colleague’s article: “CSST’s subsidiaries encompasses all major products, from front-end to back-end devices, such as HTZ and Minking for box, bullet and speed dome cameras; DIT for digital transmission devices; HighEasy for compression board products; Chenova and Skyvision for DVRs; Stonesonic for LCD monitors; and Longhorn and Alean for alarm detectors.”) A newly formed division within CSST is China Security and Surveillance Manufacturing, or CSSM, dedicated to managing manufacturing. As you mentioned, most of these brands are unknown outside of China, but domestically, CSST is doing very well. Having the bragging rights to be the first Chinese security provider to go public in the United States has also boosted its credibility." There you have it. Keep an eye on CSST and CSSM.

Israel flash back

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Thursday, March 6, 2008
Andrew Wray, over at Infrastruct, was kind enough to take time away from promoting his big acquisition to dig out of his camera a video of me shooting that cool corner shot gun when we were in Israel together. Talking to the military guys on the trip, they were a little skeptical of the accuracy, and they felt a 9mm bullet might not be the best choice, since it often travels right through a bad guy without actually disabling him (or her, I suppose). You'll also see that the Israeli shooting instructor was fairly certain that I was a pansy (I was wearing a blue blazer, after all) so he helped me steady the gun for the test shot. Still, I like this video. I couldn't help but add a soundtrack. By the way, you can see all the Israel videos on my YouTube channel.

ADT 1, Hollywood power couple 0

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Wednesday, March 5, 2008
For those of you who are keeping track of what's going on with the lawsuit against ADT filed last fall by the "Hollywood Power Couple," chock one up for ADT. Remember the Hollywood Power Couple? She (Sherry Lansing) ran Paramount Pictures, and he (William Friedkin) directed The French Connection and The Exorcist. Yeah, yeah, Power, shmower. So Sherry and William are suing ADT because they put in a $25K system and, they say, an ADT guard service did not respond quickly enough last summer when burglars busted into their Bel-Air manse, and stole "irreplaceable jewelry." On to the latest in PC vs. ADT: This paper's reporting that ADT got the go-ahead from an LA judge to go in and photograph the home as part of the company's defense. ADT can only be in the mansion for three hours and can't share the photos with anyone. Darn, I really wanted to post photos of the power couple's palace.

Can't get enough of the UTC-Diebold story

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Wednesday, March 5, 2008
So, the latest from the UTC camp is this: United Technologies Corporation remains committed to its offer. Diebold's financial and stock performance and the inability of Diebold's leadership to file timely financial statements are not valid reasons to avoid a dialogue with UTC. As we say on the playground: "Ohhh, burn!" UTC reaffirms its proposal to purchase the outstanding shares of Diebold for $40 per share cash, a 66% premium to Diebold's closing stock price on February 29th. UTC remains ready to discuss its proposal with the Diebold Board of Directors. UTC's management team, and financial and legal advisors are available to meet with Diebold and begin due diligence immediately. I like this idea that UTC's C-level people are all just hanging around in a board room waiting for Diebold's call. I hope they brought snacks...

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