Subscribe to

Blogs

Securing New Ground, day 1

 - 
Tuesday, November 13, 2007
Securing New Ground, right here on Madison Avenue in the Roosevelt Hotel, just couldn't be more New York. If there's a higher Blackberry density at any other security conference I'd be shocked. And it somehow seems very appropriate that the Brooks Brothers store is right across the street. Anyway, the mix of attendees is very heavy with manufacturers and financial types. I'm told this was once more of an alarm conference, where medium-sized companies came to look for buyers/buyees. Now, it's largely dominated by companies with new technology, along with a slew of high-ranking industry types from both manufacturers and integrators. Some notes: • Securitas Direct president and CEO Dick Seger was supposed to present but he was too busy being bought out. Oops. Sure does look good for Securing New Ground, though, as they've clearly identified industry players that the venture and capital world is interested in. Or maybe it doesn't look so good - if they know so much about the M&A market, shouldn't they have known their speaker would be busy today? (Sorry, that was a bad joke - I'm a little punchy down here in the Roosevelt bar, the only place I can get Internet, since the hook-up in my room is busted). • Joe Nuccio, head of ASG, and Robert Farenhem, head of Devcon, presented together, and it was kind of amusing that Nuccio had just this past Friday bought Matrix and leap-frogged Devcon in annual revenues. Nuccio seemed postively elated. Farenhem looked and spoke like a guy who just escaped a year in the bush. I think Devcon's fortunes are looking up, but it's pretty clear the last year hasn't been a fun one. • Brett Bontrager, head of Stanley's Convergent Security Solutions business, is a smart guy, without question, and has a good sense of humor, but has a way of talking where his voice rises at the end of every sentence like he's asking a question. I'm not sure why I find that notable, but I do. • Julie Donohue, head of IBM's security business, predicted sales would jump from $.5 billion to $1.5 billion next year for IBM's security offerings (according to notes taken for me by Anixter's Severin Mulligan - I was busy ironing my suit). That seems ambitious until you realize they group IT and physical security, and they are spending money like drunken sailors. • The lending professionals did not make me feel good about the economy. The basic message from Gretchen Gordon (CIT), Bill Polk (Capital Source), Ed Perry (Murphree Venture Partners), and Steve Sebastian (Nogales) was that capital is going to be harder to come by, you should be selling stuff off right now to increase liquidity, and lenders are going to expect stricter covenants going forward. "If you got a loan this spring," said Gordon, "good for you. You should keep it." • Robert LaPenta, head of L-1, leads a charmed life. Not only did he start a $500 million company from scratch two years ago, but this year he bought a horse, War Pass, for $180,000 that proceeded to win a Breeder's Cup race, among others, and is now worth $20 million. "Now that's a good investment," he bellowed. I'd be shouting, too. You can find him in Kentucky this spring, I'm sure.

Cross Match: Just kidding!

 - 
Tuesday, November 13, 2007
This seems slightly comical to me, but I guess it happens more often than you'd think. For the second time this year, Cross Match has decided not to offer its IPO right now: PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Nov. 13, 2007--Cross Match Technologies, Inc. announced today that it has postponed the initial public offering of common shares of the company due to volatile market conditions. The company believes that current market conditions are not favorable to maximize shareholder value and will continue to monitor the financial markets. Click on the Cross Match label below to get all my posts on this. I'm told, incidentally, that this is not uncommon for Hambrecht, who are apparently known for doing things on the cheap and pushing the envelope on last-minute timing. Also, talking about market volatility, E*Trade got itself a taste of that, and that couldn't have helped Cross Match's confidence any. I'll keep an eye out for other Cross Match news, but they'll probably hold off for another few months at this point. Who knows, maybe L-1 will buy them or something.

ASG acquires Matrix

 - 
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

 - 
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

 - 
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

 - 
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

 - 
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

 - 
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

 - 
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

 - 
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.

Pages