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Looks like that $500 million came in handy

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Wednesday, April 16, 2008

Interesting to look back on our story about Tyco taking out a $500 million line of credit following its split-up last year. There was some debate about what the money might be for: Paul Fitzhenry, Tyco spokesman, did not have any further comments on the line of credit. However, industry analyst Jack Mallon, managing partner of Mallon Associates, noted that taking a $500 million line of credit is not something a company does just as a matter of course: "The company's been in a holding pattern for the past three years. They have talked somewhat about acquisitions but haven't delivered in the security area." Is that about to change? "Perhaps," Mallon said. "The time is right [for expansion and acquisitions] and the opportunity is there," according to Mallon. Tyco may have secured the credit line for the purpose of starting a "more aggressive growth program," he said. He tempered this speculation, however, saying there may be "another factor, they may be contemplating some other capital expenditures." I guess $187 million is kind of chump change for Tyco International, but it does make me feel like we sort of called that.

Jump on the buzzword bandwagon

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Tuesday, April 15, 2008
At ISC West I had a chance to talk with Mike May, the president of iVerify, a dedicated video monitoring company in Charlotte, N.C. They just bought a 40,000-square-foot building in Charlotte on a 15-acre secure campus. Here's a good article from the Charlotte Observer about the company. (There will also be an article in our May issue about the purchase, by the way). The Observer piece was interesting because it included alternative uses for video in the retail space and the potential for video to be used for more than just security. May talked briefly about video as a marketing tool for stores to evaluate how much time customers spend at certain displays and the flow of people through the store as a way to better market products. Yet again, another example of additional services that can be incorporated with security. What's the buzzword for that again? Oh, yeah, value-added services. I bet those crazy marketing people pay good money for those kind of statistics, too. I hear there's a new conference that focuses on educating security companies about alternative value-added services to add to their offerings. Check it out: Security Business Development Forum (and yes, SSN, is coordinating a large part of it and, yes, it's certainly worth your click).

Some ADT-FirstService analysis

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Tuesday, April 15, 2008
At first blush, I thought the ADT purchase price for FirstService's security business was something of a steal. They paid (an announced) $187 million for a business that did roughly $200 million in revenue last year (theoretically - it's not broken out on FirstService's financials). So, less than 1x 12 months trailing revenues, that's pretty good, I'm thinking. But then Frank Brewer said that only about 10-11 percent of that revenue was service-based. So, that's $22 million on the high side, which is just $1.83 million of RMR (theoretically - hard to know what of that is contracted and what is one-time fees). So, if you calculate as a multiple of RMR, you've got $187m/$1.83m of RMR, which leaves you with a multiple of 102x. Obviously, this isn't an RMR-based business, and ADT is keeping the management (FirstService Security CEO Frank Brewer will be the head of a new integration division at ADT) and a lot of clients and expertise, but there's still no guarantee that SST and Intercon will continue to create new business at their past rates, and there's likely to be at least some attrition in the sales and engineering forces, as there can be during an acquisition. Now I kind of wonder if ADT overpaid a bit, especially in this economy. Money people, feel free to tear me down.

ADT to buy SST, Intercon

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Monday, April 14, 2008
Well, happy Monday! Just when things were starting to slow down after ISC West, here comes ADT to announce a $187 million acquisition of FirstService's security business (better known as SST in the States and Intercon in Canada). Here's the FirstService announcement, too. It's a "divesture," doncha know. There's a webcast later today where I can ask questions, but on the face of it, it looks like ADT got a pretty good deal. The FirstService businesses apparently reported $200 million in revenue last year, so the $187 million number looks to be under 1x. FirstService has lately been buying in the property management space, so maybe they weren't seeing an upside in security over the long haul or just thought this was a good time to get out. Plus, you'll notice they don't even mention security in their report of 3Q numbers recently (probably because it looks to be only about 10 percent of its business and all the other segments were way up, revenue wise). Here's the spin from FirstService, which seems about right: "The sale of our integrated security services division is a key strategic move by FirstService to intensify our focus as a global provider of diversified real estate services," said Jay Hennick, Founder and Chief Executive Officer of FirstService. "While the future prospects of our security division are excellent, particularly its strong internal growth potential, we concluded that accelerating the growth of our three real estate services platforms through a combination of internal growth and acquisitions would create greater long-term value for the shareholders of FirstService. We are very pleased to have found the right buyer for this highly sought after asset, and are confident that industry leading ADT will take this business to the next level." Also, the FirstService stock is down 33 percent over the past six months, so maybe that had something to do with wanting to shake things up a bit. More later.

Where in the world are the sprinkler components?

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Saturday, April 12, 2008
I never visited this place when I lived in Washington several years ago, or since then on visits to DC. It just reopened last week after a two-year renovation and now I think I've got to go. Not because the 1944 Dumbarton Oaks Conference which led to the creation of the United Nations was held here, not because Padarewsky signed the piano and Stravinsky hung out here, and not because of the art collection. No, what really interests me is that they've hidden their sprinkler system components in an innovative way. This is going to be a business trip Click on this link to see the picture of the renovated music room. And see if you can spot the sprinklers.. A little background courtesy of the NYT: Dumbarton Oaks is an 19th century Georgian house on several acres in the Georgetown section of DC that’s been a library/ art museum/music venue [owned by Harvard] since the 1940s. In the 1920s, the owners brought in Parisian interior designer Armand-Albert Rateau, the New York architectural firm of McKim, Mead & White and the classical muralist Allyn Cox. They added “wings to the house, covering walls and ceilings with images of foliage and mythological creatures, and installing mirrored shutters and gilded pilasters shaped like palm trees ... No other interiors by Rateau survive in the U.S.,” said James N. Carder, curator of the house. “We’ve treated ours with tender care, hiding all the new mechanicals in little crannies.” In the music room (top left), modeled after 16th-century French chateaus, repainted ceiling beams now conceal sprinkler pipes.

Is this "seeing through walls"?

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Friday, April 11, 2008
I just got a box in the mail containing a flying pig. Well, a plastic pig with wings that flap that you can hang from the ceiling, not something that actually flies. The reason? UltraVision says people told them they'd see through walls, "when pigs fly," and now, well, they can do it, so here are some flying pigs. I guess I have an issue with their definition of "seeing." Watch this video and tell me if you think this qualifies as "seeing" through anything. Okay, done now? I'm thinking that detection motion through walls (or the ground, or whatever) is pretty darn cool and useful, but doesn't really qualify as "seeing" anything. Sure, you can judge the size and speed of the object, but you don't know whether it's holding a gun, or is actually two people, etc. I think this is one of those cases of overselling something that doesn't need to be oversold.

More sleeping guards

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Thursday, April 10, 2008
I'm busy-busy getting our paper out today (not that you care), but wanted to post yet another sleeping guards story. You guys dishing video analytics have yet another sales piece. (EDIT: That link is fixed now - sorry.) These guys weren't just lazy, they tried hard at being lazy: NRC investigators determined that, on multiple occasions during that time, securtity officers at Turkey Point were inattentive to duty or served as lookouts so other officers could sleep on duty. Though it's the power plant getting fined...

For the real tech geeks

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Wednesday, April 9, 2008
Of all the shows on the security circuit, the Security Summit is shaping up to be one that really showcases cutting edge technology. Largely, it's a homeland security play, with most attendees being government and law-enforcement type technology validators, or so said Michael Jones, the Security Network head honcho (and head of Pro Finance Associates) who invented the Summit, when he dropped by our booth at ISC West. (EDIT: the first link is fixed now - forgot the .php) Now in its fifth year, the Security Summit (here's a review from 2006) features a technology competition with judges representing the end user, integrator, and international technology assessment community, along with panels and presentations. The Security Network is a very brass tacks kind of organization. I attended one of their events two years ago, which was focused on transportation security, and I found the attendees to be very oriented toward real-world situations and public-private partnerships. Business is done at the Summit, but it's very high level and only the biggest integrators can really play, with plenty of sub-contracting trickling down to the agile and smaller integrators. Along these lines, the Security Network has launched the Center for Maritime Systems and Security, which is a public-private partnership composed of academics, government types and security industry folks, looking to identify and promote innovative maritime technologies both for security purposes and efficiency/responsible use purposes. Something about this organization, which is a 501c3 non-profit, seems like a new and different model to me. It's worth checking out.

A guy who likes to gamble in Vegas

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Wednesday, April 9, 2008
I just got an email this morning from Wael Badawy, founder and chief technology officer of video analytics company IntelliView Technologies of Calgary. As promised, he sent me screen shots of a maintenance worker stealing a cell phone from their booth at ISC West. I really can't figure this out. ISC West is a trade show in Vegas that has more cameras per square foot than people--well almost--and this worker decides to swiping a cell phone is a good bet? Now that's taking gambling to a new level. So, this is what happened: Wael's VP, Mark Gillingham, realized he lost his cell phone and remembered leaving it on a table in the booth. To help jog his memory, he decided to take a look at the video footage from Intelliview's cameras. (While the monitors were not turned on after hours, the cameras were running 24/7.) Using analytics tools, Gillingham located footage of the phone on the table...and then saw Einstein here grabbing the phone. When I visited the booth on Friday, Wael and Mark showed me like three different angles of this guy taking the phone. Security was there and the supervisor recognized the worker who took the phone. Fast forward a couple days and Mark has his phone back. As for Einstein...maybe he should take up black jack.

One of my favorite ISC West Discoveriis

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Tuesday, April 8, 2008
This might not be practical for most of you, but Vumii's night vision solution is pretty neat so I wanted to elaborate a bit on it. Essentially, Discoverii looks like a pair of cameras side by side, but one of the housings actually has inside of it a laser beam that the camera beside it can see like a spotlight. The naked eye sees nothing, but the camera can read the names of boats 2 kilometers out on the ocean in total blackness. I was impressed. Below is a link to a video that also shows off the Sensorii program, which is software that takes a PTZ camera and takes thousands of individual pictures to create a 360-degree map that correlates with the video you're viewing so that you can always know where you are in a scene. Plus, you can create preset spots on the map for a sort of virtual tour process. The software is available separately, too. Here's the demonstration: Here's a YouTube video without the Sensorii (still pretty impressive):

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