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Cross Match to offer IPO

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Wednesday, October 17, 2007
In a time where Sarbanes-Oxley and other headaches associated with being a public company are leading a trend toward privatization, it's notable that Cross Match Technologies, which makes an FBI-accepted/SAFETY Act-approved fingerprint capture and read technology, among other biometrics, announced today it will go forward with an initial public offering. They'll be pushing 9,420,290 shares of common stock, 8,333,334 of them primary. No pricing has been discussed yet. That will be handled by W.r. Hambrecht + Co.'s OpenIPO auction process. You can get a prospectus by emailing info@wrhambrecht.com. I'm hoping to talk to someone at Cross Match today and to have more information in our newswire tomorrow. What I do know is that they first announced intentions for the IPO in April, then postponed due to market conditions in August, and now have revived intentions. Is it interesting that Credit Suisse was going to act as the bookrunner, with USB, Morgan Stanley, and Raymond James co-managing, and now it's going to be led by Hambrecht, with Stanford Group and E*Trade comanaging? I don't really know.

VisualGate gets another partner

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Wednesday, October 17, 2007
Remember that story about IP-over-powerline manufacturer VisualGate you all liked so well? Now you can get their products through Tri-Ed. Even better, Tri-Ed has new branches in Chicago and Miami at which you can score some VisualGate technology. Well, it's better if you live near Miami or Chicago, anyway.

The GAO is your friend

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Tuesday, October 16, 2007
If there's one piece of the federal government I love, it's the Government Accountability Office. If you're not signed up for their daily email, let me tell you it's one that's worth adding to your daily quota. Today, three great reports came through looking at transportation security. I won't thoroughly summarize them all here, but Cathleen A. Berrick, director, homeland security and justice, is very frank about where we stand with aviation and surface transportation security in general and then more specifically with commercial aviation. Then, Stephen L. Caldwell, director, homeland security and justice, talks about progress on the SAFE Port Act, one year out. If you're looking for information about homeland security that's completely devoid of political posturing, this is where to look.

Honeywell to buy Hand Held Products

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Monday, October 15, 2007
Honeywell International announced today a definitive agreement to purchase Hand Held Products, a privately held automatic identification and data collection (apparently, there's a need for an acronym to describe this, AIDC) based in Skaneateles Falls, N.Y. (Skaneateles? Isn't that the name of a Beatles tribute band that plays everything with horns on the upbeat?). The purchase price? $390 million, for a firm that did $285 million in 2006. Hand Held's core products, according to a release, are bar code scanners and rugged (they have chest hair) mobile, wireless computers that are used for asset-tracking, logistics execution and supply chain management. The company will become part of Honeywell's Security Group within the Automation and Control Solutions business, assuming the deal passes regulatory review and closes as expected. In the statement, Honeywell honcho Ben Cornett noted, "Hand Held has demonstrated leadership in image-based technology, which is replacing laser-based legacy produts." Interesting. I'll be curious as to how the security folks make best use of this. Not sure what it means, but Honeywell's stock was is currently down about 70 cents on the news.

Brink's has a smoking problem

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Saturday, October 13, 2007
It's always interesting to see how a story can get spun in the media. Check this short brief about the Brink's armored car division getting fined for environmental violations. (By the way, we write "Brink's," because when you go to their site they call themselves The Brink's Company, and we generally believe in calling companies what they want to be called, unless they put their name in all-caps or something, for no good reason - we're not down with that. Why other papers don't put the apostrophe in Brink's, we don't know.) It's titled, "Brinks to Pay Hefty Fine." That certainly got my attention. Then here's the first sentence: Brinks will pay a $147,000 fine for violating smoke emissions standards at the company's facilities in San Diego and elsewhere in California, officials said on Wednesday. Okay, it's certainly bad that Brink's wasn't self-policing its diesel trucks and was polluting the air, etc. No doubt. But do you think the Brink's Company really sweats a $147,000 fine? For me, that's a hefty fine. For Brink's, that's peanuts. Just look at their financials. They're doing $3 billion a year, with EBITDA of nearly $400 million. I'm sure they'd rather not pay the fine, but that's less money than Bill Belichick was fined for cheating in the NFL (at least Bill's was tax deductible). Hardly "hefty," I'd say. Still, stop with the polluting, Brink's. Also, dear Pirate hedge fund guys: This is your chance to go for the jugular! The armored car guys are polluting? Sell them! Now! Get Gordon Gecko on the phone. He'll buy.

On skyrocketing, and not

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Thursday, October 11, 2007
This story, from First Coast News in Florida, is classic mainstream journalism regarding security systems - in that it's terrible. Basically, the story is "Security Camera Sales Skyrocket," but, of course, they give no actual evidence for this supposed skyrocketing, they don't consult any of the easily available market research data gatherers (Frost & Sullivan have overall camera sales growth at about 8.6% for 2006), and they take the word of one integrator, Certified Security, as gospel for the entire industry. Now, Certified is a fine First Alert dealer and I'm sure owner Joe Hassan knows what he's talking about, but check this part of the story: Hassan says business has skyrocketed in the past 18 months because the devices have become less expensive, and more necessary. "People do less bad and more good when they know they're being watched. It's a fact of life," said Hassan. Actually, this is not a fact of life. There isn't, in fact, a direct correlation between people knowing they're being watched and their behavior. Just see this study on intersections where people are told they're being filmed and the rate of red-light running. Or, even better, this study about convenience store robberies. And I quote: Cameras were removed from control stores that previously had them and put into experimental stores. Also, the experiment was announced publicly to make potential robbers aware of the changes. The results of the experiment showed that there were no statistically significant differences between experimental and control stores. In fact, robberies decreased in all stores except Baton Rouge, where the increase was too minimal to be considered significant. These results suggest that increased reliance on cameras as opposed to other robbery prevention techniques is not effective. However, there are problems with drawing inferences from this experiment since randomization was not used. People who commit crimes are not rational actors. They're motivated by something much stronger than reason - usually a need for drugs, really. I believe cameras are great for business efficiency and for catching people after they commit crimes, but they simply don't work as deterrents unless they have analytic capabilities that can alert a responder in real time to prevent the crime from occuring. You'd think a news organization would look into that sort of thing. It's a kind of interesting slice of human behavior. Here's more from the news article: "Your alarm systems prevent and detect, your video camera's actually after the fact, help catch, prosecute, and basically give proof to put someone in jail," said Hassan. Okay. Sounds reasonable. Is there a reason we're making cameras plural by using an apostrophe? "Camera's catch everything," said Shea. Wow, they did it again. Hassan says some businesses that have really gotten into the surveillance systems are day cares and insurance companies that are requiring the companies they insure to have the cameras installed. Another feature of the surveillance camera's, is that you can access them from anywhere in the world on the internet. A third time! Cameras are apparently so special and selling so fast that you need to make them plural with apostrophes! Now that's skyrocketing. Also, I love that this is the last paragraph of the story. They didn't feel any need to elaborate on this point? Also also, I'm sure Hassan is mostly selling to day cares and small businesses that are mandated by insurance companies to have cameras installed, but is it likely that these two verticals are where you find most cameras installed? I'm thinking not. Good reporting First Coast News. Don't you have a car crash to cover somewhere?

Good times for camera sales in FLA

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Thursday, October 11, 2007
This story, from First Coast News in Florida, is classic mainstream journalism regarding security systems - in that it's terrible. Basically, the story is "Security Camera Sales Skyrocket," but, of course, they give no actual evidence for this supposed skyrocketing, they don't consult any of the easily available market research data gatherers (Frost & Sullivan have overall camera sales growth at about 8.6% for 2006), and they take the word of one integrator, Certified Security, as gospel for the entire industry. Now, Certified is a fine First Alert dealer and I'm sure owner Joe Hassan knows what he's talking about, but check this part of the story: Hassan says business has skyrocketed in the past 18 months because the devices have become less expensive, and more necessary. "People do less bad and more good when they know they're being watched. It's a fact of life," said Hassan. Actually, this is not a fact of life. There isn't, in fact, a direct correlation between people knowing they're being watched and their behavior. Just see this study on intersections where people are told they're being filmed and the rate of red-light running. Or, even better, this study about convenience store robberies. And I quote: Cameras were removed from control stores that previously had them and put into experimental stores. Also, the experiment was announced publicly to make potential robbers aware of the changes. The results of the experiment showed that there were no statistically significant differences between experimental and control stores. In fact, robberies decreased in all stores except Baton Rouge, where the increase was too minimal to be considered significant. These results suggest that increased reliance on cameras as opposed to other robbery prevention techniques is not effective. However, there are problems with drawing inferences from this experiment since randomization was not used. People who commit crimes are not rational actors. They're motivated by something much stronger than reason - usually a need for drugs, really. I believe cameras are great for business efficiency and for catching people after they commit crimes, but they simply don't work as deterrents unless they have analytic capabilities that can alert a responder in real time to prevent the crime from occuring. You'd think a news organization would look into that sort of thing. It's a kind of interesting slice of human behavior. Here's more from the news article: "Your alarm systems prevent and detect, your video camera's actually after the fact, help catch, prosecute, and basically give proof to put someone in jail," said Hassan. Okay. Sounds reasonable. Is there a reason we're making cameras plural by using an apostrophe? "Camera's catch everything," said Shea. Wow, they did it again. Hassan says some businesses that have really gotten into the surveillance systems are day cares and insurance companies that are requiring the companies they insure to have the cameras installed. Another feature of the surveillance camera's, is that you can access them from anywhere in the world on the internet. A third time! Cameras are apparently so special and selling so fast that you need to make them plural with apostrophes! Now that's skyrocketing. Also, I love that this is the last paragraph of the story. They didn't feel any need to elaborate on this point? Also also, I'm sure Hassan is mostly selling to day cares and small businesses that are mandated by insurance companies to have cameras installed, but is it likely that these two verticals are where you find most cameras installed? I'm thinking not. Good reporting First Coast News. Don't you have a car crash to cover somewhere?

More bad news for USProtect, GSA

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Wednesday, October 10, 2007
Okay, so not only does the GSA have a bribery problem, it has a not-doing-its-job problem, too. The Washington Times (America's newspaper, dontcha know) reports that USProtect, the company that bribed its way to government contracts back when it was known as Holiday International, wasn't even on the up-and-up when it put in its application for GSA scheduling. Richard Hudec, 44, was charged in federal court in Maryland last week with tax evasion and concealing information about his background, which included four felony fraud convictions, in connection with his role as chairman and chief operating officer for USProtect Corp., a private security company. Oops. But, of course, Hudec isn't the story here. I include items like this for your perusal not because this is somewhat related to the practice of installing security systems, but because many of you have to work with the GSA, and there is now more than a little reason to doubt the GSA's competence. Some details of Mr. Hudec's incarceration can be obtained over the Internet. For example, the federal Bureau of Prison's free public inmate locator database — www.bop.gov — shows that Mr. Hudec was released from prison on Feb. 21, 2001. According to charging documents, Mr. Hudec "assisted in the preparation and submission" of the security company's application to the General Services Administration in 2002, which once approved placed the company on the federal supply schedule, a clearinghouse of government-approved contractors. The application listed Mr. Hudec as chief operating officer and improperly certified that no principals of the company had any fraud judgment within the past three years, authorities said. Okay, so that may be some crappy writing on the part of the venerable Times, but it essentially makes the point that you could have Googled this guy and discovered he was a felon. I'm all for giving people a second chance, but something in my gut says people who've been convicted of multiple fraud counts maybe shouldn't be working with the federal government. USProtect is competing with a number of well respected companies for this government work. Is the GSA keeping appropriate tabs on your competitors as you vie for contracts?

Linear-IEI deal goes final

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Tuesday, October 9, 2007
I don't have a link to a release, as it was only emailed to me via Word file and I can't find anything official on the web, but Linear has now confirmed that the deal agreed to in May to acquire International Electronics, known as IEI, has been consummated. However, the release doesn't indicate whether the initial financial terms remained the same. Anyhoo, here's the relevant piece of the release, if you're interested: The Home Technology Group of Nortek, Inc., a group of home and commercial convenience and security electronics companies lead by Linear LLC, a wholly-owned subsidiary of Nortek, has made a move to significantly strengthen its presence in the access control industry with the purchase of International Electronics, Inc. IEI, headquartered in Canton (Boston area), MA. IEI has been in the security and controlled access systems business for over 30 years. The two companies have very much in common with their line offerings but very little actual product overlap. The IEI line ranges from its Door-Gard stand-alone and entry-level access control products to its flagship product, eMerge, a browser managed integrated security management system. Linear has traditionally been in access control for perimeter security, including telephone and gate entry. Linear Chairman Grant D. Rummell noted the opportunity for synergy arising from the complementary Linear and IEI product lines. “IEI is a market leader in access control stand alone keypads, locksets, and systems access control products and this will greatly broaden the over-all Linear offering,” he said. “At the same time,” Rummell pointed out, “IEI’s experience and innovation in the areas of access control software adds substantially to our systems depth.” IEI President and CEO John Waldstein stated: “We look forward to the added market presence the association with Linear affords us and the opportunity for growth it provides. Being part of a strong access control and security industry leader allows us to continue to broaden our access control offerings as well as continuing to assure our commitment to excellence in service and support.” Plans call for IEI to continue at its Canton, MA, facility and to maintain and expand the IEI brands. Don't they know that all we care about is what they paid for IEI?

Zebra Technologies buys proveo, Navis is next

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Tuesday, October 9, 2007
If you're like me, when you think Zebra, you think printers, but the company is rapidly becoming much more than that, turning itself into a major player in the RFID market. This week, Zebra announced an intent to buy Navis, a California-based manufacturer of RFID solutions directed at the maritime market, having been the first to provide automated container terminal operating systems in 1988, which improve velocity and visibility of cargo movement. Considering the SAFE Port Act and its mandates, this seems like a wise investment of $145 million (to be paid in cash). Add this move to the 200 patents the company bought in the first part of this year, and a secondary announcement this week of the acquisition of proveo AG for $16.3 million, getting into the business of tracking ground service vehicles at airports, and Zebra is looking like a force in tracking important things in two rapidly growing large security verticals. Clearly a company to pay attention to. Trackings things as a service could provide a tidy RMR. Oh, and Zebra expects $60 million a year in revenue from Navis going forward.

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