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ASG acquires Matrix

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Monday, November 12, 2007
ASG has been busy, busy, busy. It followed up the Oct. 26 recap (search for "ASG recapitalizes" in www.securitysystemsnews for details) with today's announcement of the acquistion of Matrix Security. ASG CEO Joe Nuccio, who was on his way to Securing New Ground (in Manhattan, Nov. 14-15), said the deal“brings some very, very talented employees into the ASG family; we’re looking forward to growing and developing in those markets,” he said. Matrix has 33,000 accounts and $1 million in RMR, bringing ASG’s total to $3.8 million in RMR and to roughly 108,000 customers. This buy moves ASG into new contiguous geographic areas—the Carolinas and Northern New Jersey. Matrix has 12 branch offices, five in North Carolina, two in Virginia, two in New Jersey, and one office in the states of Maryland, Delaware and Pennsylvania. “Our customers and employees have always been extremely important to us. I am really pleased that they are joining an elite company like ASG where there will be even greater opportunities for them in the future,”said Ira Riklis, CEO of Matrix Security Group, in a statement. Barnes Associates helped negotiate the deal. Financing was provided by Parthenon Capital.

They're ready: Honeywell's First Alert Professionals' convention

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Monday, November 12, 2007
I’m back in Maine after attending Honeywell’s First Alert Professionals' conference, Nov. 8-11, which drew a crowd of 850 to the Westin Kierland Resort in sunny Scottsdale, Arizona--about 100 execs from Honeywell Security, and representatives from 170 First Alert companies. The mix of companies, from the tiny to the huge, included those who've been in business for a while—Mel Mahlerof ADS, John Bourque of HB Alarm, Guardian Protection’s Russ Cersosimo (and his enthusiastic group of at least 50), among many others—to newer companies. I had the chance to meet in person two of the younger security industry “movers and shakers” featured in our “20 under 40” special section this summer—Shandon Harbor, president of SDA Security of San Diego; and Brett Bean, president of FE Moran of Champaign, Ill. Both Bean and Harbor were recognized during the event for their company's respective marketing efforts. The theme of the event was a question: ‘Are you ready?’ OK, ready for what? (one company wore t-shirts that said they were ready to stop receiving emails and postcards asking if they were ready) Ready, explained Honeywell Security and Custom Electronics' president Ron Rothman during the Nov. 9 opening session, for the communications revolution that's going on. He was referring to the "perfect storm" underway: the demise of the POTS line; the AMPs sunset; the new generation of (Gen X and Y) consumers; the availability of new technology; and, new Internet-era entrants into the security business (the Icontrols and Ucontrols, for example, in the world--who may be underestimating the complexity of the security market, according to Honeywell execs, but who may provide a distraction in the meantime.) If you’re ready, opportunities abound, Rothman and others said, but if you’re not, and you’re still doing things the same old way, you may be out of business or losing money soon. "This (change in technology) will happen once in a lifetime" he said, where dealers have an opportunity to future-proof their accounts by "using multi-path, end-to-end solutions." One of the new products/services that Honeywell is offering its dealers is called Total Connect which allows a customer, business or residential, to control an alarm system via email, web browser or cell phone. During an educational session, called "Profitting From the Changing Landscape of Communications" Honeywell’s vice president of AlarmNet Gordon Hope packed the room as he explained how to position security systems to the next generation of buyers, those who are looking for a bells and whistles and who don't ever worry (unlike previous generations) how reliable a product is. "The challenge we have," Hope said, "is to embrace the fact that the world is changing and to learn the strategies to succeed ... the value of your business will be based on how well you navigate this landmine of communication challenges." John Jennings, chief executive officer of Safeguard Security had another standing-room-only conference room for his educational session called "100% GSM," where he talked about his rationale for installing GSM in all residential systems. Talking about the changing communications landscape, he asked the audience how many had an IT professsional on staff. "If you don't have one, start interviewing," he said.

Optelecom-NKF has a nice quarter

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Friday, November 9, 2007
I know I've been heavily oriented toward finances lately, but (especially with a looming recession thanks to an increasingly pathetic dollar and oil over $100 a barrell) I think it's important for integrators and installers to partner with financially sound manufacturers. The IP surveillance market is going shake out at some point. One winner might end up being Optelecom-NKF, which just got itself NASDAQ listed and has successfully morphed itself from what was essentially a cabling manufacturer to a fully formed IP surveillance/networking company. I wrote about the plan here in January of 2006, talking with James Armstrong, who had just been appointed to the newly created position of executive vice president of North American operations. Check this quote, talking about their 2005 purchase of NKF, for $26 million: "We saw that the world was changing and NKF had already seen that the world was changing." Armstrong said their profitability and large head start in research and development along IP/Ethernet-ready product lines made NKF very attractive. Now, that acquisition is paying off in what Optelecom-NKF can soon deliver to integrators. "Say, for integrators, there maybe 10 elements to an installation; currently we provide two of those elements. Our strategy is that we want to provide seven." If you've seen Optelecom-NKF at the shows recently, you know they've now got video management software you can throw on a PC and all you've got to get from somebody else is the cameras. Makes you wonder if there's a camera buy in Optelecom-NKF's future. Also, I keep hearing they're going to drop that NKF. They ought to do that sooner than later. Anyway, seems like the plan's working. They just released 3Q numbers today, and things are looking good: The Company reported record revenue for the third quarter of $11.5 million, an increase of 13% from last year's third quarter of $10.1 million. Operating income for the quarter ended September 30, 2007 totaled $1.5 million compared to $963 thousand for the same period last year, an increase of 59%. Net income for the quarter totaled $882 thousand, or $0.24 per fully diluted share, an increase of 123% compared to net income of $396 thousand, or $0.11 cents per fully diluted share, for the same quarter last year. For a company that did just over $33 million in 2005, those are some good numbers.

Optelecom-NKF has a nice quarter

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Friday, November 9, 2007
I know I've been heavily oriented toward finances lately, but (especially with a looming recession thanks to an increasingly pathetic dollar and oil over $100 a barrell) I think it's important for integrators and installers to partner with financially sound manufacturers. The IP surveillance market is going shake out at some point. One winner might end up being Optelecom-NKF, which just got itself NASDAQ listed and has successfully morphed itself from what was essentially a cabling manufacturer to a fully formed IP surveillance/networking company. I wrote about the plan here in January of 2006, talking with James Armstrong, who had just been appointed to the newly created position of executive vice president of North American operations. Check this quote, talking about their 2005 purchase of NKF, for $26 million: "We saw that the world was changing and NKF had already seen that the world was changing." Armstrong said their profitability and large head start in research and development along IP/Ethernet-ready product lines made NKF very attractive. Now, that acquisition is paying off in what Optelecom-NKF can soon deliver to integrators. "Say, for integrators, there maybe 10 elements to an installation; currently we provide two of those elements. Our strategy is that we want to provide seven." If you've seen Optelecom-NKF at the shows recently, you know they've now got video management software you can throw on a PC and all you've got to get from somebody else is the cameras. Makes you wonder if there's a camera buy in Optelecom-NKF's future. Also, I keep hearing they're going to drop that NKF. They ought to do that sooner than later. Anyway, seems like the plan's working. They just released 3Q numbers today, and things are looking good: The Company reported record revenue for the third quarter of $11.5 million, an increase of 13% from last year's third quarter of $10.1 million. Operating income for the quarter ended September 30, 2007 totaled $1.5 million compared to $963 thousand for the same period last year, an increase of 59%. Net income for the quarter totaled $882 thousand, or $0.24 per fully diluted share, an increase of 123% compared to net income of $396 thousand, or $0.11 cents per fully diluted share, for the same quarter last year. For a company that did just over $33 million in 2005, those are some good numbers.

Check out our digital edition

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Friday, November 9, 2007
Everyone has their own unique preferences for consuming information. Well, we've got another way for you to get information from Security Systems News: our digital edition. If you're a registered user of the site, you can now read our monthly issues digitally, in a format that mirrors our newspaper, but offers searchable text, the ability to email articles to other people, and clickable ads, just for a start. If you're unsure how to use it, click on the "help" tab once you get to the digital edition interface.
Click on the comments link below to give me feedback on the edition - I think it's pretty neat, but you may have suggestions for us to make it better. Also, some of you have complained about having a difficult time logging in. If that's the case, email our web guy, Mark MacKenzie and he'll take care of you.

Cross Match changes mind again

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Tuesday, November 6, 2007
Quickly, I thought I'd give you an update on Cross Match: From a press release: Cross Match Amends Registration Statement in Connection with its Initial Public Offering PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Nov. 6, 2007--Cross Match Technologies, Inc. announced today that it has amended its Form S-1 registration statement on file with the U.S. Securities and Exchange Commission in connection with the initial public offering of its common stock. The Company amended its expected public offering price to now range between $11.00 and $13.00 per share. In addition, the offering will include 8,333,334 primary shares, no secondary shares and the Company granted the underwriters the right to purchase up to 1,250,000 additional shares from the Company to cover over-allotments, if any. WR Hambrecht + Co is the sole bookrunner for the offering. Stanford Group Company and E*TRADE Securities LLC are the co-managers. The shares are being offered through WR Hambrecht + Co's OpenIPO(R), an auction that allows investors to participate in the pricing and allocation process of the IPO shares. Copies of the prospectus relating to the offering, when available, may be obtained from WR Hambrecht + Co's prospectus department at 555 Lancaster Avenue, Suite 200, Berwyn, PA 19312, by telephone at 877-828-5200 or by email at info@wrhambrecht.com. Click on the Cross Match tag below and you'll get my other post on this.

Securitas Systems buys PEI

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Monday, November 5, 2007
In their first U.S. acquisition as an independent firm, Securitas Systems announced on Thursday the purchase of PEI Systems, an integrator serving New York and New Jersey. They're pretty vague with the numbers, saying they paid somewhere between six and nine times EBITDA, which who knows how much that is for a company with a little more than $11m in revenues. I'm guessing it works out to about one times revenues, maybe a little more to account for the 20 percent of revenues collected via service contracts. I'll have a little more on the newswire Thursday, but no one is calling me back on this.

3Q earnings round up

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Friday, November 2, 2007
With a number of security firms posting earnings lately, I thought a Friday round-up might be interesting: • L1's business is finally rolling like they've promised. These strike me as particularly positive developments: Revenue for the third quarter of 2007 was $115.5 million compared to $39.8 million in the third quarter of 2006, an increase of $75.7 million or 190 percent. The Company had impressive organic growth of 32 percent for the quarter. The Company’s net income in the third quarter amounted to $1.5 million, or $0.02 per diluted share, compared to a net loss of $29.3 million, or $0.66 per diluted share, in the third quarter of 2006, which included asset impairments and merger-related charges of $22.8 million. It's certainly always better to make $2 million rather than lose $29 million. • Stanley's security segment sales are up 24 percent • UTC Fire & Security's organic revenue growth in the quarter was 4%, led by Lenel, the security businesses in the Americas, and Asia. • Honeywell's income is up 14 percent, but see these paragraphs: "People might be concerned whether there is the margin potential in ACS that the company has intimated," he said. The ACS business, representing nearly 40% of Honeywell's quarterly revenue, provides technology and services to improve efficiency in manufacturing and home and building climates, as well as provides products for security and fire detection. • Brink's third-quarter revenue was $817.0 million, up 15.2% (10% on a constant currency basis) from $709.5 million in the third quarter of 2006. Operating profit increased to $60.5 million, up 11.2 % from $54.4 million in the year- ago period. • Ingersoll Rand'srevenues from continuing operations for the first nine months of 2007 have increased approximately 9 % compared with the same period of 2006, and remember that: The Company's Bobcat, Utility Equipment, Attachments and Road Development business units are now being reported as discontinued operations. It's still a good time to be a security company, but not as good as it has been.

CEDIA cancels spring EXPO

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Monday, October 29, 2007
Hey folks, sorry I haven't been posting for a few days. I took a vacation to see the in-laws in Ohio and blogging while vacationing is apparently not recommended by 9 out of 10 mental health practicioners. By the way, the in-laws live in a brand-new home in one of those brand-new developments. They have a Brink's panel installed, but they never activated it. However, they have about every home automation product you can imagine, and they use all of those, hooked up through three networked flat-panel TVs. Something about that seems telling. Maybe it's telling me that I should pay more attention to what the folks at CEDIA are up to, as they are in the home like security firms are, just doing different things. I thought things were going hot blazes with CEDIA members, so this news was surprising. To quote: Though there was support for the recently announced Spring EXPO concept initially, member feedback regarding market condition changes and other factors have prompted CEDIA to step back from Spring EXPO at this time and focus on education and expanding the exposure opportunities with architects, builders and interior designers at the third annual Electronic Lifestyles Forum. I'm guessing the downturn in the new home building market is the "market condition changes" part of that statement, which is understandable. But why is this market so dependent on the new builds? If home automation isn't for people like me, who live in houses built in the 1800s, there's an obvious limit to market penetration. Us New Englanders like cool gadgets, too.

Making no-response lemonade

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Thursday, October 25, 2007
After 24 hours getting back to the East Coast from the CSAA show in Hawaii, it's ironic that this article about the consequences of Fontana, California's verified response policy should come across my desk (that desk being in the Newark airport). Wednesday, I sat on a panel with other journalists and was asked if I thought verified response would take hold nationally. I said it was my opinion that public relations nightmares with burglars confronting store- and homeowners in the act of verifying alarms (as happened here in Dallas) would make an increase of fines much more likely, which is the trend we're seeing nationally with our alarm ordinance watch column. I think this article backs me up. Note: Last year the Fontana Police Department responded to more than 8,500 burglar alarm calls -- an average of about 24 a day. More than 99 percent of them proved to be false alarms -- a tremendous waste of money and resources, said Lone Star Security Regional Manager Bruce Boyer. Notwithstanding the overuse of the m-dash in those sentences -- fair enough. Boyer asked: Why have high-trained, highly-skilled police officers responding to burglary alarms when their time could be put to much better use? This, however, is not the next logical question. Why aren't they instead asking how to eliminate the false alarms? Why aren't they talking about enhanced call verification or a CP-01 standard panel? They probably do that later, right? Not so much. Anyway, Fontanta passed a verified response law that went effective Oct. 1, and here are some opinions: And that's important to Gerry Herrera, storeowner and manager of Sonora Tire Shop. "We want a security company coming out and checking on the place," he said. Makes sense. I don't want to go burglar-hunting either. For Mini Perez, Sonora's chief financial officer, the P.D.'s change of policy makes sense. "It's less taxpayer expense," she said. "It was a waste of time for the police coming out. It should be the responsibility of the alarm company to provide the service. Police have better things to do." Aack! Are you people reading this? The police have better things to do than respond to alarms and make sure people are safe? That kind of opinion on the part of the city can only be the result of terrible mismanagement by local alarm companies. Sorry guys. How can it get to the point where you're officially the boys that cry wolf? It's no wonder Lone Star Security has been able to capitalize by offering to "come in and use the existing alarm system" and add on an in-house guard service. (Which is code for come in and get people to break their contract, right? Not that I'm saying I don't understand the business model, just trying to be clear.) Here's Boyer again: "The Police Department is right. It's the alarm company's responsibility to investigate," he said. "The Police Department has better use for its officers. Cops are highly trained to do dozens of jobs. We are trained to do one thing well -- respond." This guy has completely won the marketing battle. By framing the question as, "Do you want to waste police officers' time?," he's gotten the answer he's looking for: "Of course not. Can we pay you to verify our alarms?" He talks about being partners with the police department, and there is some sense to his policy of alerting the cops that they're responding, kind of a back door dispatch. That's a good thing, but I'm troubled by this part: The gun stays in the holster and only comes out when an officer faces deadly force. And that deadly force must have the ability to deliver it against an officer or customer, said Boyer. "If the deadly force is across the street holding a knife, the gun stays in the holster," he said. "Our job is to investigate alarm calls. If there's criminal activity, we call the cops. We are not Rambo." Well, not only are you not Rambo, you are also not a police officer. Let's hope deadly force is never used, but it's hard to rely on hope in that potential situation. You think people are upset about Blackwater shooting innocent Iraqis (I gave you an Irish link, for non-US perspective)? What happens to a community when a private security company shoots a kid reaching for a cell phone? If a police officer does that, it's one thing. In this case he was placed on leave. I think it's a very different situation if it's a private security officer, where the city doesn't have recourse and the company is not accountable to the citizens. All of this tells me that alarm companies have to make sure their communities don't get to the point where they think they're just crying wolf, and they need to work on programs like those developed by SIAC to work with states on enhanced call verification and CP-01.

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