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Integrators: Making money on big security data

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Wednesday, December 11, 2013

When I met with my TechSec advisory board this past summer to talk about TechSec 2014, one of the topics the group wanted to make sure we talked about was big data. We had an excellent primer on big data at TechSec 2013, thanks to Axis’ Steve Surfaro and EMC’s Patrick Snow. For this year’s conference (Jan. 28-29 in Delray Beach, Fla.), we wanted to take a different tack.

I"m really pleased with the idea we came up with. We've asked four leading integrators to discuss how they’re helping their customers mine and synthesize data from their video and access control systems.

Kratos CTO Chris Peckham is going to moderate the educational session that will feature these integrators: David Coleman of Avrio RMS; Nigel Waterton of Aronson Security Group; Robert Locke of Open Innovation (part of Tyco); and, Don Zoufal of SDI.

The discussion will center on how the data is extracted, what kind of business intelligence that data provides and in what format. Each integrator will focus on the data mining they're doing in a specific vertical market including city surveillance, airports and retail.

Sound good? You can register for TechSec here.

Affiliated rolls out InView at Security Summit '13

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Friday, December 6, 2013

The big news emanating out of Affiliated Monitoring’s Security Summit ’13 was (as expected) the roll out of InView, the company’s new video monitoring platform. Compatible with a host of DVR and NVR manufacturers, the suite signals Affiliated's entrance into video verified alarms.

In his welcome speech, Affiliated president Stanley Oppenheim told dealers they can expect to provide services in the coming years that they may not even be thinking about now. And, based on vice president Daniel Oppenheim's keynote, InView may be the platform that tries to bear that philosophy out. The suite is designed to continuously add new functionalities, Oppenheim said, and though he couldn’t disclose all that was in the pipeline, it’s safe to say he expects the offering to be a powerful generator of RMR.

Befitting the introduction of InView, the morning session consisted of a sales strategy panel with Larry Folsom, president of American Video and Security and CEO of I-View Now, and Deanna Blair of Videofied, who describes herself as a “video verification evangelista.” The panel was moderated by Mike Zydor, managing director at Affiliated.

In the discussion, Folsom talked about the positive correlation between sales and demos with video verified alarms. Demos are a crucial step in selling verificatio technology, he said, because there’s no better way to demonstrate its unique value to subscribers. Both Blair and Folsom also stressed the importance of honing in on a specific market, and leading instead of finishing with video verification when pursuing a sale.

After an InView demonstration led by Affiliated’s Aaron Salma and Larry Weintraub, we were led by Ashley Owens, Affiliated territory manager for the south, on a tour of the central station. This proved to be a major highlight of the summit. The place is sleek, and it’s hard to imagine that just a few years ago the venue was a furniture warehouse. The main space for operators and dealer relations personnel is spacious, and still has ample room to accommodate personnel growth in the future. The interior of the facility underwent a wholesale revision. I was told by Jesse Rivest, regional sales manager at Affiliated, that the mezzanine overlooking the much of the central's interior did not even exist when Affiliated bought the facility.

The tour concluded with us given access to a room housing two enormous, bright yellow Caterpillar generators which, should the need arise, allow the facility to run without external power assistance for 24 days straight.

This blog is beginning to stretch the limits of its medium, so I’ll plan to follow up with more highlights from the show in a future post or in the summit roundup. 

Tynan joins MicroPower Technologies

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Wednesday, December 4, 2013

As part of its growth strategy, MicroPower Technologies has another new executive: Dave Tynan, who joined the wireless surveillance provider—known for its low-power and solar solutions—as VP of global marketing and business development

Tynan is a familiar face in the security industry, having worked for Avigilon, GE Security and Verint.

When I spoke to Tynan, he said the recent additions to the MicroPower team are a reflection of the company’s “laser focus on end users” and showing them how MicroPower  can help them “gather indisputable forensic evidence … and reduce the cost of doing so.”

Tynan moved to San Diego and joked that after a just a few days in California he is talking the “green theme.” In addition to saving money, the solar and low-power requirements of MicroPower cameras means “not only can the technology be applied to proactive solutions that reduce crime, [it also] addresses the corporate call for sustainability [requiring] fewer resources for the security infrastructure, [reducing] carbon emission and … no back hoe for trenching.”

Among his initiatives are monthly Voice of the Customer  web conferences.

All things video at Affiliated's Security Summit '13

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Tuesday, December 3, 2013

I first got word in the fall about Affiliated Monitoring’s Security Summit ’13, and the event caught my attention then because it was designed around a very focused topic which I've covered more frequently of late: video monitoring.

Tomorrow I depart for Affiliated’s headquarters in Union, N.J., where I’ll partake in several seminars developed to educate dealers about the best way to incorporate video monitoring into their business.

While the summit bears the title “Earn more money with Video,” that doesn’t totally do justice to the breadth and scope of the seminar topics. There’s a session on making the transition from analog to IP video. There’s a roundtable discussion on interactive services as it pertains to video monitoring, and how dealers can take advantage of video to bolster the usefulness of home automation packages.

The other seminars deal with video monitoring success stories, featuring companies that have boosted RMR from the offering, and an “ask the lawyer” section in which dealers can ask an alarm industry attorney the legal questions that could have a bearing on how they run their business.

I hope to be active on Twitter throughout the day, and to pen a blog or two about the most resonant discussion points that unfold amid the seminars.

ADT partners with State Farm to promote Pulse

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Tuesday, December 3, 2013

Security companies often use as a selling point the fact that insurance companies give discounts to homeowners who have a security system. But ADT announced this week that it is leveraging that insurance company relationship in a new way: by partnering with State Farm to give that leading insurer’s customers special deals on Pulse. And the customers who get Pulse can also end up with a discount on their State Farm home insurance.

Seems like a pretty smart way to get customers to sign up for a smart home solution—and one that benefits both of these big companies.

Here’s more from ADT’s Dec. 3 release:
 

ADT today announced it is teaming up with State Farm to help its customers better manage and control their homes. ADT will provide special offers on its ADT Pulse home security and automation solution to State Farm customers, who may also qualify for home insurance discounts. The special offer also includes a free in-home security consultation, 24/7 professional monitoring by trained ADT security specialists and custom installation with a six-month money-back guarantee.

… “The average insurance claim for a home burglary or fire can cost thousands of dollars,” said Don Boerema, chief corporate development officer at ADT. “Through home automation capabilities and enhanced security features, ADT Pulse is the ideal solution to help State Farm customers connect to their families and homes to mitigate loss.”

“As the leading provider of homeowners insurance in North America, State Farm has a keen interest in helping customers prevent loss,” said Jack Weekes, operations vice president at State Farm. “By teaming up with ADT and other home control and monitoring providers, we are helping customers protect their family and property in today’s high tech world.”

The deal caught the attention of Insurance & Technology magazine, a business trade publication for insurers, which says in an article that it's "the latest sign that the smart device revolution is poised to shake up the insurance industry." The article wonders if insurers can "find the right tone and offering to capitalize" on the new trend. I'm wondering what other security companies will team up with insurers to better promote their security products.

Ascent Capital reaps windfall of Security Networks acquisition

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Tuesday, November 26, 2013

Buoyed by the $487 million acquisition of Security Networks, Ascent Capital, the holding company that owns Monitronics, posted some sterling numbers for the third quarter of 2013—numbers that underscore why investment firms continue to find the RMR model attractive (long-term contracts, high margins, cash flow predictability). The list goes on.

Ascent’s net revenue for the three and nine months (ended Sept. 30, 2013) increased 36.8 percent and 27.4 percent, respectively. The growth was fueled by an increase in subscriber accounts and “the related increase in monthly recurring revenue,” according to an Ascent news release.

Security Networks was no small acquisition; when it was purchased in July it was the fourteenth largest residential alarm monitoring company in the United States. In addition to bringing in 225 dealers, the move brought another 195,000 accounts into the fold.

Ascent also reported that Monitronics’ adjusted EBITDA for the three and nine months intervals increased 35.2 percent and 27.1 percent, respectively. They also saw a modest increase in RMR per subscriber (6.3 percent).

The news release would suggest this isn’t the last we’ve heard from Ascent Capital on the acquisition front in the alarm space. Ascent chairman and CEO Bill Fitzgerald stated, “Looking ahead, we remain committed to identifying accretive acquisition opportunities, making certain that we continue to put shareholder capital to work in an effective and productive manner.”

Mike Haislip, president and CEO of Monitronics, noted that the near-term goals include further integrating the Security Networks business, and positioning the combined company for future growth.

What will Avigilon do with $69 million?

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Tuesday, November 26, 2013

Avigilon now has $69 million (Canadian) at its disposal for “general purposes and strategic acquisitions.”

The HD surveillance provider, which got into access control last May with the $17 million purchase of Red Cloud, today announced that it closed a $69 million bought deal equity financing.

So what will Avigilon do with the funds? I called Avigilon this morning to ask about plans for the funds. In an email response Alexander Fernandes, Avigilon president and CEO said: "... we look forward to growing Avigilon even further and will continue to consider potential opportunities as they arise. Although we are not presently considering any specific acquisitions, we are regularly presented with opportunities. The proceeds of our recent bought deal financing will allow us the flexibility to act upon any strategic opportunities that could complement Avigilon’s original focus on video surveillance."

I asked Avigilon CEO Alexander Fernandes about possible acquisitions in an interview one year ago. This was prior to the Red Cloud acquisition, and he said that an access control purchase was possible.

Here’s an excerpt from that interview.

With money in the bank, Avigilon will continue to add employees. The healthy balance sheet provides “stability and a better cushion,” Fernandes said. And while Fernandes emphasized that the company is “focused on internal growth,” it is in a position to make an acquisition if it sees fit. 

What might fit? “Something outside of video but complementary and related … like analytics,” Fernandes said. Or access control? “That’s possible,” he responded

Think it might acquire some more analytics capabilities now? We’ll see.

AVigilon is also pouring money into its growth plan. Its recent investor presentation outlines the following steps to get to its goal of $500m in revenue in 2016. 1. Expanding its sales reach (in North America, South America, EMEA and the UK; expanding into APAC with a dedicated sales force; growing the business development team to target enterprise opportunities) 2. Building brand awareness; and 3. Accelerating innovation by investing in R&D team; improving product development structure to get products to market faster.

Avigilon had another rosy quarter—doubling its revenues since Q3 of 2012. Last year it reported $25.5 million in Q3 revenues. This year is reported $51.1 million. It reported $12.7 million in EBITDA in Q3, up from $4 million one year ago. And, it reported Q3 net income of $8.6 million, compared to $2.1 million one year ago.  

The company announced the offering earlier this month. It issued 2,863, 270 common shares in Canada, for a price of $24.10 CDN. The offereing was underwritten by syndicate of underwriters led by GMP Securities L.P. and including BMO Capital Markets, National Bank Financial Inc., CIBC World Markets Inc., RBC Capital Markets, PI Financial Corp. and Cantor Fitzgerald Canada Corporation

One of ADT’s largest shareholders sells most of its stake

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Tuesday, November 26, 2013

The ADT Corp. reported yesterday that it was buying back 10.24 million of the shares of its third-largest shareholder, Corvex Management. Keith Meister, the hedge fund’s founder, who had been on ADT’s board since late 2012, also announced his resignation as director.

ADT’s stock price plunged early yesterday morning shortly after the news and while it recovered somewhat, was still down .59 percent this afternoon.

Meister said in a prepared statement, “We initially invested in ADT because of its leading market position and its potential for creating long-term shareholder value. The board and management have achieved admirable results over the past year.”

Now, Corvex will have less than 1 million shares in ADT, The Wall Street Journal reported. The WSJ said ADT bought Corvex’s shares at $44.01 each, so Corvex got a return of about 20 percent on its investment.

What does it all mean? A WSJ report yesterday sheds some light:
 

Within weeks of ADT's debut as a public company in October 2012, Corvex began pushing the company to buy back 30 percent of its stock with borrowed money. The hedge fund at that time said the stock was worth at least $61.

Corvex criticized ADT's conservative approach to debt, calling the company's capital structure "indefensible" during a presentation that accompanied Corvex's disclosure of a 5 percent stake in ADT at the time.

ADT's board has followed much of Corvex's strategy, including financing stock purchases with debt. The company recently announced that it will accelerate the purchase of $400 million of stock under an agreement with J.P. Morgan Chase. Once the purchase of the Corvex shares is completed, the Boca Raton, Fla., company will have spent $2.4 billion to retire about 20 percent of its stock.

 

ADT adds 100,000 customers in fiscal 2013 and its Devcon buy boosts its RMR, but attrition climbs to 13.9 percent

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Wednesday, November 20, 2013

Just about one year after The ADT Corp. split from Tyco International and became a stand-alone, publicly traded company, the company reported today that its RMR climbed 4.7 percent in Q4 and that the rise was helped by its acquisition of Devcon Security this summer.

Boca Raton, Fla.-based ADT, which officially became independent Sept. 28, 2012, reported its Q4 and fiscal year 2013 results today. It added 100,000 subscribers in 2013, bringing its total customer based to 6.5 million, the company said.

ADT also reported average revenue per user (ARPU) had climbed to $40.31, an increase of 3.7 percent, and said that helped increase RMR. The company also said its ADT Pulse overall take rate was at 32 percent in Q4, up from 13 percent last year due to new customers and price escalations to existing ones.

In the earnings call, ADT CEO Naren Gursahaney said, "We recently passed the 500,000 mark with Pulse customers. Just to put that into perspective for you, if Pulse was a stand-alone business, it would be the sixth largest security provider in North America. While this a major milestone for us, it still only represents about 8% of our total customer base, so we still have a tremendous opportunity to further grow our Pulse customer base."

Gursahaney also said that in Q4, "Net attrition increased by 10 basis points sequentially and 40 basis points year-over-year to 13.9 percent, with more than 100 percent of the increase attributable to higher relocation disconnects as a result of the continued recovering in the housing markets." The company is launching new programs to address attrition, which it plans to announce soon, he said.

The company’s revenue increased in Q4 by 4 percent to $846 million from $812 million, higher than the $843.8 million analysts expected. EBITDA was $431 million in Q4,  up 7.5 percent compared to the previous year.

Much of ADT’s total revenue is recurring revenue, the report said. RMR was $777 million in Q4. The company also said small business RMR growth for fiscal 2013 was 7 percent, up from 3 percent in 2012.

Just before its Nov. 20 earnings report, ADT announced this week it was defending its turf by suing Utah-based Vision Security for the second time over Vision’s alleged deceptive sales practices. The new lawsuit comes shortly after Vision and Security Networks, of which Vision is an affiliate, “settled with ADT for $2.2 million and agreed to a permanent injunction [from] engaging in similar practices,” according to an ADT news release.

Vision told me it denies ADT's allegations and intends to fight them.

The AP reported ADT’s shares closed at $42.81 yesterday, Nov. 19. Shares are down 8 percent for the year to date, the AP said.

Gursahaney predicted positive results for fiscal 2014, with revenues and RMR climbing 4 percent to 5 percent. "I'm confident the momentum we have built, coupled with the improvement programs we have implemented to address our challenges, will position us for continued revenue growth and operational improvements in 2014," he said.

Security Partners hires new operations manager

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Wednesday, November 20, 2013

Security Partners has hired Richard Bosley III, formerly of AlarmWATCH, to be its new operations manager, a position in which he will oversee the company's development in the wake of acquiring its second central station.

Bosley held multiple positions over an 18-year stint at his former company where he said, at one time or another, he worked “every position,” doing everything from service calls, IT and data entry to marketing and dealer support.

Bosley said his top priority at Security Partners remains on track: to get the Lancaster central station and the San Antonio facility, which it acquired in August, “fully, 100 percent hot redundant.” This involves switching both centrals to the Tadiran phone system and adding Bold’s Manitou servers to the San Antonio central. The two-fold process is scheduled to be completed sometime in January. 

Beyond the primary goal of redundancy, Bosley hopes to use his experience in a diverse range of positions to strengthen the critical relationships between Security Partners and its dealers, and between dealers and end users. “When [dealers] grow, we grow,” he said, adding that Security Partners plans to “refocus the central station to give some customer service training and backup support, and be able to offer services that Security Partners might not have thought about in the past.”

Another major area of emphasis, he said, will be helping dealers grow and market themselves, thereby forging stronger relationships with customers. “If you’re not reaching out to your customers we almost guarantee another alarm company is,” Bosley noted. “We really want to help dealers become more acquainted with end users instead of just installing alarms and collecting checks each month.”

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