Subscribe to

Blogs

Pinnacle Security fined more than $500,000

 - 
Monday, February 4, 2013

Summer-model Pinnacle Security is getting a fresh start after traditional-model home security giant Protection 1 recently purchased select assets from the company.

The deal has great potential, according to an alarm company owner who has married both models.

But it appears that problems from Pinnacle’s past continue to dog it. According to news reports, the Utah-based company now has to pay $525,000 as the result of a lawsuit filed by California’s Contra Costa County, charging Pinnacle with deceptive business practices.

It's not the first time Pinnacle has been sued over such issues.

Over the years the company has been accused in a number of states of deceptive sales practices. Last fall, for example, Pinnacle agreed to pay a $1 million fine in a settlement with the state of Illinois for such alleged violations as “slamming” customers and even hiring felons as sales reps.

According to a news report, the following information was released from the office of Contra Costa County District Attorney Mark A. Peterson. It said that the civil judgment against Pinnacle, in addition to the payment of penalties and costs:

 

o    Requires Pinnacle’s sales representatives to refrain from making false and misleading statements during the door- to-door sales presentations.
o    Prohibits Pinnacle sales representatives from telling consumers that they will get free or discounted products or services if they allow a Pinnacle sign to be placed in their yard.
o    Prohibits Pinnacle sales representatives from telling consumers that sales representatives are engaging in “seed marketing, advertising, marketing, or increasing Pinnacle’s visibility in the neighborhood”.
o    Requires that Pinnacle sales representatives comply with section 17500.3 of the Business and Professions Code by immediately verbally identifying themselves, who they work for, and what they are selling.
o    Requires that Pinnacle use contracts that comply with California’s Unruh Act and federal regulation Z pertaining to retail installment contracts by disclosing, among other things, the total price of the alarm monitoring service for the initial contract term of years.
o    Requires that Pinnacle use Spanish language contracts for customers to whom the sales presentation was made primarily in Spanish.
o    Requires that whenever a sale is made to a customer who already has monitoring equipment installed by another monitoring service provider, that Pinnacle shall not remove that customer’s existing monitoring equipment until such time as the three-day cancellation period (applicable to door-to-door residential sales) has expired.
o    Puts limits on the amount of contract termination fees that can be charged to customers.
o    Requires the payment of restitution to certain customers; and
o    Requires that Pinnacle adopt specified provisions to monitor the future conduct of their sales representatives.

 

Q1 sales, profits up for ADT

 - 
Wednesday, January 30, 2013

Sales of Pulse are up more than 6 percent and recurring revenue up more than 5 percent, The ADT Corp reported today as it released its results from its first quarter ending Dec. 28. The home security/home automation giant also said it added 257,000 new customers and has 6.4 million customer accounts.

When ADT on Sept. 28 became an independent, publicly traded company after spinning off from Tyco International, CEO Naren Gursahaney told me that it was not "a moonshot” for ADT’s residential penetration rate to rise from around the industry standard of about 20 percent to 40 percent.

Of course, it’s too soon to tell if ADT will succeed in that goal, but the company is performing well according to the report it released on Jan. 30. Here’s a synopsis from a Reuters story on the earnings results:
 

Home security services company ADT Corp reported a higher quarterly profit on Wednesday and announced a $600 million accelerated share repurchase.

The company, formerly a part of Tyco, said net earnings had risen 12.9 percent to $105 million, or 44 cents per share, from $93 million, or 39 cents per share, a year earlier.

Analysts on average were expecting a profit of 43 cents per share, according to Thomson Reuters I/B/E/S.

Sales rose 1.8 percent to $809 million, with recurring revenue from existing customers accounting for 92 percent of the total and increasing 5.1 percent from a year earlier.

The Boca Raton, Florida-based company, which provides security monitoring services to homes and small businesses in North America, said it still expected a rise of 4.9 percent to 5.2 percent in recurring revenue in fiscal 2013.

Here’s also some of what ADT had to say in its report:

Naren Gursahaney, ADT’s Chief Executive Officer, said … “Looking ahead to the balance of the year we will continue to focus on our ultimate objective of creating long-term value for our shareholders by reinvesting in our business to drive profitable growth, and returning excess cash to our shareholders.”

Recurring revenue, which made up 92% of total revenue in the quarter, was up 5.1%. Recurring revenue growth was driven by a 4.7% increase in ending average revenue per customer, which rose to $39.27, and 0.5% net growth in ending customer accounts. Non-recurring revenue declined 25.3% as the company’s mix of newly installed systems continues to shift toward more ADT-owned systems, increasing deferred revenue and reducing current period installation revenue. Total revenue of $809 million increased 1.8%, compared to the first quarter of 2012. Attrition was flat sequentially at 13.8%. ADT added 257,000 new customers and closed the quarter with 6.4 million customer accounts.

EBITDA before special items was $417 million, 6.1% higher than the first quarter of the prior year, and EBITDA margin before special items was 51.5%, a 210 basis point improvement. The margin expansion was mainly due to the favorable impact from the mix shift to more ADT-owned systems and was also aided by cost control initiatives that helped to offset the expense impact of dis-synergies caused by the separation from the Tyco commercial business and Hurricane Sandy.

 

Hot button: Who’s getting into mobile PERS now?

 - 
Wednesday, January 30, 2013

The world of mobile PERS and remote health monitoring continues to expand.

At the Consumer Electronics Show in Las Vegas earlier this month, ADT announced that it was getting into the game by teaming with Ideal Life, a Toronto-based company whose health monitoring and information technology will be integrated with ADT Pulse to provide “proactive prevention” for people managing chronic health conditions. The system uses digital, wireless, secure two-way communicators to measure and relay information about glucose levels, blood pressure, body weight, oxygen saturation and heart rate.

Royal Philips Electronics, which has long been a player in personal emergency response systems, also made news at CES by introducing Lifeline GoSafe. The mobile PERS system combines the company’s AutoAlert fall-detection capability with two-way cell communication and up to seven user-location technologies.

“Our intention is that GoSafe will provide users with the confidence to get back to activities or go to places they have scaled back on, knowing that help is easily accessible,” Rob Goudswaard, senior director of product and service programs for Philips Home Monitoring, said in a prepared statement.

The need to provide more protection for seniors as they maintain their independence isn’t lost on Mace Security International, which is “looking hard” at getting into the mobile PERS space, CEO and President John McCann told SSN last week.

“I think you’re going to see a shift from just home security to security 24/7,” McCann said. “As you look at that shift in the world, and I use my dear sweet mother as an example, I’m a little more worried when she’s on the road than when she’s at home. Therefore we’re looking at how do we increase that fence around her so she’s safe, so loved ones feel that the person they’re worried about is safe.”

Security dealers who want to take advantage of this growing market might want to think about attending the second annual PERS Summit, which will be held Sept. 10-12 in Park City, Utah. Last year’s inaugural session brought together more than 100 dealers, service providers and manufacturers’ reps for three days of networking. To learn more, go to www.perssummit.com.

New jobs for Tyco’s Hauhn, Monaco

 - 
Wednesday, January 30, 2013

Two Tyco IS executives have new/expanded roles, according to an internal Tyco announcement. 

Effective this week, Jay Hauhn is now VP, Product Management and Industry Relations; Hank Monaco is now VP, Marketing.

As VP, Product Management and Industry Relations, Hauhn will oversee product technology and innovation as well as industry and government relations. He will lead product and service solution development and engineering, and is charged with the development and implementation of product strategy. Hauhn will also be in charge of the technology roadmap for strategic product vision. Hauhn, who has served as Tyco's VP, Industry Relations, will work continue to work with industry associations and Tyco’s Government Relations office.

As VP, Marketing for Tyco IS, Monaco will lead advertising, branding, communications, interactive marketing, strategy, business development and product marketing. Monaco will also identify new market opportunities and drive the development of new value-added products and services.  Most recently, Monaco was VP Commercial Customer Marketing. The company said he “played a key role in leading the development and implementation of vertical market solutions roadmap … [and] developed the commercial business first ‘customer experience platform and attrition / price-based churn models,’ which enabled the business to prioritize initiatives to improve customer retention.”

 

ESX one of the fastest-growing trade shows in U.S.

 - 
Wednesday, January 23, 2013

It should come as no surprise to anyone who has attended ESX in the past couple of years that it’s one of the fastest-growing trade shows in the country.

There was confirmation of that recently from Trade Show Executive magazine, which named the Electronic Security Expo one of the publication’s Fastest 50 winners for audience growth. Attendance at ESX grew 15.1 percent from the 2010 event in Pittsburgh to the 2011 event in Charlotte, N.C., easily outpacing average trade-show growth of 1.9 percent across a wide spectrum of industries, according to Darlene Gudea, president of the Trade Show Executive Media Group.

“At a time when most trade shows were battling the Great Recession and could barely maintain attendance levels of the past, along came the Electronic Security Expo, achieving a dramatic 15 percent jump in attendance,” Gudea said in a prepared statement.

The performance lifted ESX to 45th on the magazine’s list, “a success story that others can emulate and … a tribute to [the show’s] organizers,” Gudea said.

George De Marco, ESX chairman, said the growth is based on a winning formula: enhancing the show floor each year, adding to the education program and providing an array of networking events for integration and monitoring companies.

“We remain focused on executing our strategy of providing a dynamic ecosystem for security professionals to experience at ESX, helping them develop new partnerships, uncover new business opportunities and connect with colleagues,” De Marco said in the statement.

ESX moved to Nashville in 2012—hello, Tootsie’s—and it will be held there again in 2013, with events running from June 17-21 at the new Music City Center. For more on what to expect, go to www.esxweb.com.

Sprinkler standoff good argument for tax incentives

 - 
Wednesday, January 23, 2013

Businesses v. Fire Sprinklers. That could be the headline of a story this week in the Chicago Tribune about a fire sprinkler requirement for businesses in the village of Westmont, Ill.

It appears businesses and the village are at odds over such basic fire protection, but they needn’t be if only Congress would stop stalling and pass the Fire Sprinkler Incentive Act, or FSIA. The act would provide tax incentives that make sprinklers more affordable.

The story says that the village requires businesses to install fire sprinklers but has put that safety requirement on hold because businesses say they can’t afford to add sprinklers. Here’s what the story had to say:
 

The village began a moratorium on the sprinkler requirement in 2010 for three years, citing that it had deterred businesses from locating in Westmont. The moratorium expires in spring and the board plans to discuss the issue at a meeting in February.

Trustee Ellen Emery said the moratorium was intended, in part, to allow property owners more time to become compliant. But many businesses have not, she said, adding that building owners, not lessees, should be responsible for installing the fire sprinkler systems.

Still, trustees said many landlords are requesting tenants install the systems.

"If a building is not up to code, a new business isn't going to want to invest their life savings into it," said Emery. "There have been many cases where businesses decided not to open up in town after learning they would have to pay for the installation of the sprinkler system."

Emery says a strip mall on the south end of town is almost completely vacant because the owner doesn't want to pay for the installation of a sprinkler system. Fire officials also told trustees that 65 businesses have not installed a mandatory wireless fire alarm system while 550 buildings have. Of those not in compliance, about 55 are in the downtown area, they said.

The fire code issue comes as the village is considering enacting a tax increment financing (TIF) district on the south end of the community and possibly in the downtown to help revitalize the areas.

A TIF is one answer that communities like Westmont could employ to resolve this issue. But that approach is piecemeal when compared to the Fire Sprinkler Incentive Act.

After 100 people were killed in The Station nightclub fire in West Warwick, R.I. in 2003, coalition of groups, including firefighters, fire sprinkler manufacturers and fire and life safety groups have been lobbying Congress to pass FSIA.

According to the latest version, introduced in the House of Representatives in 2011, the act would amend the Internal Revenue Code “to allow: (1) 100% expensing in a current taxable year of the cost of an automated fire sprinkler system, as defined by this Act; and (2) accelerated depreciation (i.e., a 15-year recovery period) of such an automated fire sprinkler system that is installed in a building where the floor of any occupiable story is greater than 75 feet above the lowest level of fire department vehicle access.”

 

Rapid acquisition

 - 
Wednesday, January 23, 2013

Rapid Security Solutions of Sarasota, Fla., is growing rapidly following an acquisition, announced today, of Armenti Construction and Access Control, Inc, of Lake Worth, Fla.

I had a chance to speak to Steve Paley, president and COO of Rapid, (and also president of the new Florida chapter of ESA) this afternoon.

Paley said the deal doubles the size of his company, bringing 10 new employees and a number of accounts, notably with gated communities in the Palm Beach county area. "The former owners (Bill and Danielle Armenti) will stay on for the transition." New staff members include 6 technicians and 4 sales and office personnel. "They're outstanding. We're happy to have them join our team," Paley said.

"It's a great location; we needed to be there," Paley said. Armenti's work involved installing lots of security gates and "about 5 percent video [at the communities]," Paley said.

Rapid's plan is to go in and "on top of the gate work, we lay in video and access control ... it's a huge opportunity to gain a greater share of their wallet."

Rapid now has two offices: its home office in Sarasota and now one in Lake Worth. It has warehouses and staff members in Tampa, Orlando and Cape Coral, but Paley said the company will have brick and mortar in all locations--and plans to "double in size within two to three years."

The growth will come from acquisitions and organic growth. Paley said Rapid is "fortunate to have good financial partners that believe in our strategic plan."

Steve Rubin of Davis Mergers and Acquisitions assisted Armenti in the deal.

Look for more on this deal later this week.

Alarm industry mourns Michael Kallio of Mace CS

 - 
Wednesday, January 16, 2013

Mace Central Station announced late Tuesday that Michael Kallio, the company’s vice president of business development, died Jan. 10 after a battle with cancer.

Kallio was a 26-year employee of Mace CS in Anaheim, Calif., and was a member of the California Alarm Association.

“Michael was a dedicated, loyal manager and he helped guide the company to be one of the most respected central stations in California and the West,” said Michael Joseph, vice president and general manager of Mace CS, in a prepared statement.

Mace Security International announced that it will create the Michael Kallio Spirit Award and will provide matching funds for a scholarship endowment in his honor. The endowment will help deserving students with their college educations.

Kallio was promoted to vice president of business development at Mace CS in April 2012. Previously, he was manager of business development and operations manager. He was also a real estate agent at Joshua Realty & Loan in Orange County, according to his LinkedIn profile.

ADT performing well

 - 
Wednesday, January 16, 2013

Since ADT spun off from Tyco International Sept. 28 and began trading on the New York Stock Exchange, the news about its performance has been upbeat. And earlier this week, according to news reports, Credit Suisse Group reaffirmed its outperform rating of the The ADT Corp. and raised its target price from $50 to $54. It cited ADT mergers and acquisitions as a factor.

Here’s more from Credit Suisse’s Jan. 14 assessment of ADT:
 

Some investors think they "missed" the chance to own ADT. We disagree, and see upside to the mid/high $50's over the next 12 months. TP raised to $54 (from $50). We think ADT's M&A spend will exceed their budgeted $150mn in 2013 and drive revenue and earnings growth above current market expectations. The fragmented security monitoring industry is filled with potential targets for ADT and given most industry competitors operate near identical business models, most M&A should offer significant cost synergies and earnings accretion. An additional half turn of EBITDA leverage to ADT's current targets would give ADT $700mn to spend on M&A; this could mean $175m in incremental EBITDA before synergies (10%+ accretive).

In trading yesterday, ADT closed at $47.25. Its 52-week range went from $35.38 to $47.50.

 

A NICE Verint deal?

 - 
Tuesday, January 15, 2013

Will there be a very nice Verint NICE deal soon? That's what the rumor mill says.

Rueters reported yesterday that Verint Systems stock was up more than 7 percent and NICE shares were up 6.7 percent on reports from Globes, an Israeli financial site, that said Nice Systems is talking to Verint about buying it for $1.5 billion.

It's said to be a cash and stock offer that would "represent a 19 percent premium on its market cap of $1.26 billiion," according to Rueters.

I called NICE and Verint for comment and heard back from Erik Snider, NICE director of corporate communications. Snider said via email, "As policy, NICE does not comment on such rumors."

This possible acquisition comes as Verint is about to become an independent company, something I reported on last fall. Here's that story. 

I spoke to Michael McManus of Imperial Capital, who noted that if this deal happens it's not necessarily a "security thematic" play, as both NICE and Verint have non-security divisions. "They're much more than two VMS companies," he said.

The fact that Verint is scheduled next month to become independent from its former owner and former messy capital capital structure is important, McManus noted. (Take a look at the link above to learn about some of the compllications Verint had with its parent company.) 

Once Verint does become independent, it will be the first time that that it "would be separated from its past troubles—the first time in recent memory that it would be possible [for someone to acquire Verint] in a clean deal," McManus said.

McManus speculated that NICE may want to make a preemptive offer just as Verint is about to become public and "before a U.S.-based interloper" makes on offer for Verint.

I also have a call into  Verint, no word yet.

Stay tuned.

 

Pages