Subscribe to


Talk of Tyco earnings and PULSE performance. Schneider rumors not addressed--directly anyhow

Thursday, April 28, 2011

This morning’s Tyco International conference call started with a warning that it is Tyco’s policy not to respond to questions from the press or anyone else about rumors and speculations [ie talk of a Schneider takeover]. The speaker said there would not be any more comments on this issue today.

There were not any more comments directly on that issue today ... but Tyco chief Ed Breen did answer a questions from a JP Morgan analyst about his “philosophy on strategic corporate actions and how he looks at the company portfolio.” That’s not the exact question. It was something along those lines--a heapin’ helpin’ of corporate business speak, but it did elicit some sort of interesting thoughts from Breen about the three businesses that currently make up Tyco.

Breen said he’s very happy with the ‘07 split up of Tyco and the combination of companies that now make up Tyco International. “It’s a combinations that’s created value I’m very proud of ... we’ve got an all-time high stock price.” All three businesses are doing very well he said. “I love the status of the company and I love the mix of businesses.” They’ll continue to grow and play well in emerging markets, he said. He did add that “we always present to our board all alternatives ... for long term [options] to sustain shareholder value.”

During the past several weeks when rumors of Schnieder making a play for Tyco started to make the rounds, UTC was also mentioned as a possible suitor for Tyco. Some analysts speculated that Tyco was being shopped around. While Schneider issued a statement saying they’re not currently in talks with Tyco, UTC did not comment directly.

Bloomberg reported comments from UTC CFO Greg Hayes on April 20, however, which certainly cast doubt on UTC's interest.

From the Bloomberg report: “I can’t say anything specifically about any particular acquisition target,” Chief Financial Officer Greg Hayes said today in an interview. “I will say it’s very difficult for any U.S. multinational to acquire a company based in Switzerland where the tax rate is 15 percent and our rate, the U.S. statutory rate, is 35 percent.”

Ben Harrington of the UK Daily Telegraph had some interesting speculation on what may have happened with Schneider. Maybe they got mad and called off talks—for right now anyway.

This is from a Harrington column more than a week ago,  “French companies do have a track record of doing that. Last year, for example, GDF-Suez publicly called off its deal talks with London-listed International Power in January after news of the discussions leaked in December 2009. A few weeks later both companies were back in negotiations and a formal transaction was announced to the market .... I suspect the French [Schneider] will get over their temper tantrum over the next few weeks and then talks with Tyco will re-start. Whether a deal ever gets done remains to be seen - it's a difficult market to get transactions over the line.”

OK, back to the earnings call, another analyst asked—in not so many words of course—about the Flow Control business possibly being sold off at some point.

Could the flow business (theoretically of course) be monetized in a way to avoid cost leakage? he asked. After reiterating that he likes how the Tyco portfolio looks right now, but that he and the board are always looking at alternative ways to create shareholder value, Breen said yes. There are always “creative ways to structure deals” and held up the sale of the Electrical and Metal unit as an example of that could be done.

And news on the actual quarterly earnings...a very good quarter for Tyco International.  In the security business: “Revenue of $2.1 billion increased 12% in the quarter with organic revenue growth of 5.5%.  Recurring revenue grew 4.5% organically with growth in all geographic regions.  Non-recurring revenue grew 7% organically led by increased volume in the North American commercial business.”

Here’s an Bloomberg summary  and the actual Tyco press release. 

And one more interesting point that the earnings call touched on this morning: ADT’s PULSE product. Breen had this to say: Only the internal sales team (which makes up about half of the sales team, the other half are the dealers) is currently selling PULSE, but official figures show about 15 percent of customers are buying the PULSE product. However on the “back half the quarter that’s starting to move up to 18 percent,” he said. There are three levels of the PULSE product and 80 percent are taking the first level [least expensive] package.

RMR associated with PULSE accounts is $50, without PULSE $43, ADT heritage accounts $36 and Broadview heritage accounts $33. “The next step is to get the dealers trained up by ’12 and get them cranking along,” Breen said. In the future, the plan is to go back to the $33 and $36 accounts and remarket the PULSE product. Breen also said they company is taking a look at how the PULSE product may “play out in the commercial base, in the small- and mid-tier business base. It’s one thing we’re intrigued with ... we’re working on it but not talking about launching it yet.”


Well known monitoring exec makes a move

Wednesday, April 27, 2011

MJ Vance accepts her Presidential Award from the Missouri Fire Marshal's Association.

I got an email from MJ Vance the other  day and leanrd that she's left CenterPoint Technologies. She's not sure where she's going yet, but is keeping all her prospects open. Asked why she was moving on, MJ said the departure was amicable and simply a sign of growth.

MJ also told me that she wants to stay within the security industry, and is particularly interested in the PERS industry. In the meantime, she said she "may take the summer off and ride cross country on my Harley."

I wrote not too long ago about another well-known and well-liked leader in the central station space moving over into PERS when Southwest Dispatch's VP Ty Davis moved to Life Alert.

I first interviewed MJ back during my first trip to ISC West in 2008. I interviewed her on camera for our then newly-launched ssnTVnews. That was a popular interview on our site--testament to MJ's stature in the industry.

I also spoke with MJ in 2010 when she hired a new operations manager and won the Presidential Award from the Fire Marshal’s Association of Missouri (pictured above).

Good luck MJ! 


Bloomberg profiles Vivint

Tuesday, April 26, 2011

Vivint, the Provo, Utah-based home automation/security services company previously known as APX Alarm Security Solutions, made the Bloomberg business news this month.

The April 20 article, which profiled the company and CEO and co-founder Todd Pedersen, concluded that the 5,000-employee summer-sales-model company, which it said had $245 million in revenue last year, will need “some aggressiveness” to succeed in its push into the home automation market. Vivint rebranded from APX on Feb. 1 to underscore the expansion of its offerings from traditional home security products to home automation.

The article also contained some interesting tidbits about Pedersen’s plans for positioning Vivint in the new market.

“Pedersen is betting that home automation technology will increase his company’s customer base of 500,000 homes by 40 percent this year and a similar amount next year,” the article states. “While he expects revenue to increase by at least 25 percent this year and next, Pedersen says Vivint won’t be profitable for a few years because it subsidizes the automation equipment and installation. The starting price for a home automation package is $199, with a minimum 42-month “home monitoring” contract of $69 a month. Pedersen says Vivint doesn’t start making money on the packages until the third year.”

The article says that to pay for operations, the company plans to use a $690 million revolving credit line from Goldman Sachs. I just wrote this month about that recently completed new senior debt financing package, which included $125 million in new financing and is said to be the largest of its kind in the industry.


Personnel changes signal new direction for Honeywell’s First Alert, CSS dealer programs?

Thursday, April 21, 2011

Do personnel changes that took place in the last week at Honeywell signify a new direction for two major dealer programs—First Alert Professionals and Commercial Security Systems?

Based on a statement provided to Security Systems News that alludes to “the next stage in its evolution” it appears that Honeywell may intend to make some changes in the dealer programs, but the manufacturer has not publicly released information on any such plans to date.

According to several dealers who spoke to me this week, Honeywell on Monday began contacting dealers from its First Alert Professionals (FAP) dealer program and its Honeywell Commercial Security Systems (CSS) dealer programs to inform them that two longtime and well-known employees: Joe Sausa, president of FAP, and John Lorenty, head of CSS, were no longer employees of Honeywell as of last Friday, April 15.

Dealers told me that the message from Honeywell was essentially this: Honeywell is taking the dealer programs in a new direction with dealers’ needs in mind, and, there will likely be some restructuring of the programs. Dealers I spoke to were eager to hear more specifics of Honeywell’s plan.

I contacted Honeywell with several questions yesterday. Lourdes Pena, Honeywell’s business communications manager, provided the following information for my deadline today.

“Honeywell regularly evaluates its business to identify new opportunities and ensure that we remain competitive. Assessing our dealer programs for their sustained development is part of this ongoing process. We remain committed to the Honeywell’s First Alert Professional (FAP) and Commercial Security Systems (CSS) dealer programs. They deliver great advantages to our community of dealers and have brought continued success to our business. We look forward to the next stage in their evolution and to continue setting the standard in the industry. Dealers should continue contacting their current representatives for updates on our product offerings through FAP and CSS.”

Joe Sausa had served as president of First Alert since 2004. Sausa oversaw both FAP and CSS until last year. At ISC West in March 2010 Honeywell announced that John Lorenty, who previously had been in charge of access control, would take over as head of CSS, and Sausa would continue as president of FAP.


UTC Fire & Security has healthy parent

Wednesday, April 20, 2011

Business wires are abuzz today about the first quarter earnings reported by United Technologies Corp., parent company of UTC Fire & Security, up 19 percent over the quarter a year ago. Word is that the earnings beat estimates.

An April 20 release from Hartford, Conn.-based  UTC, a diversified company that provides high-tech products and services to the building and aerospace industries, said the company "reported first quarter 2011 earnings per share of $1.11 and net income attributable to common shareowners of $1.0 billion, up 19 percent and 17 percent, respectively, over the year ago quarter. Sales for the quarter increased 11 percent to $13.3 billion with 9 percent organic growth. Favorable foreign currency translation and net acquisitions each contributed 1 percent to the sales growth.”

The release continued: “Results for the current quarter include $0.02 per share in restructuring costs. Earnings per share in the year ago quarter included $0.05 in restructuring costs. Before these items, earnings per share increased 15 percent year over year. Foreign currency translation and currency hedges at Pratt & Whitney Canada accounted for $0.01 of the earnings per share increase.”

“This was another solid quarter for UTC with broad-based acceleration in organic growth, as well as strong earnings momentum and cash generation,” Louis Chênevert, UTC chairman & chief executive officer, said in the release. “Nearly 20 percent growth in earnings per share reflects excellent conversion, especially as we continued to increase our investments in game changing products and technologies.”

The release also notes that UTC is now raising its 2011 profit forecast.

“Based on the strong start to the year, particularly in Carrier’s short cycle businesses, we are raising the full year earnings per share expectation to $5.25 to $5.40, from $5.20 to $5.35 previously. We now anticipate 2011 EPS growth to be 11 to 14 percent on sales growth of 5 percent,” Chênevert added in his statement. “The global economic recovery continues to gain traction as evidenced by the momentum of our end markets and we now expect 2011 sales of $57 billion, at the high end of our prior range of $56 billion to $57 billion.”

The AICC National Monitoring License Subcommittee needs your help!

Tuesday, April 19, 2011

So I'm looking at following up on the AICC National Monitoring License Subcommittee's work so far for a source book article. You'll recall that since the flap over Article 6-E proposed legislation in New York for licensing central stations, momentum has really shifted to a federal-level push.

I talked with AICC chairman Lou Fiore today about how things were going, where the committee was at, what work had been done and what remained.

First of all, Lou pointed me to the comment website that had been set up. This is the place you can--and should--go to read the proposed legislation, which is the proposal late Vector president John Murphy developed years ago, and offer your tweaks. The subcommittee hopes to get lots of feedback from all of you, so take some time, go to the site, download the proposal, read it, think about it and make some suggestions through the website's online form.

Also, I'd love to hear what you think about the proposal the way it stands. How do you feel about a national monitoring license? Drop me a line or give me a call (207-846-0600 ext. 254) and let me know.

Security in the doghouse

Monday, April 18, 2011

It’s not unusual for a homeowner to get a home security camera installed to keep at an eye on a pet while away from home. But here’s a new twist I read about in “Popular Science” magazine: installing a security camera in your dog’s doghouse so you can monitor your pet while it’s out there.

The article, written by John B. Carnett, begins like this:

“Pearl, my beloved labradoodle, dutifully watched me build myself a new house for the past three years. So when I was almost finished, I decided to build her a place of her own. A standard model just wouldn’t do, though, so I went a little overboard. After creating the design with CAD software, I added a solar hot-water radiant-heating system and made a green roof that retains rainwater, creates oxygen, and improves insulation. Then I decked it out with a few other touches, including some colored LED lights to brighten things up and a Web-enabled wireless video camera that lets me keep an eye on Pearl from my computer or phone.”

He said he put 70 hours into building the high-tech doghouse, at a cost of $1,500.

The article got me thinking: Is this a new market for dealers—selling homeowners security cameras for their doghouses?

Another reader of the article was thinking along similar lines. The reader wrote in the comment section: “This is very cool, is there a market for high end dog houses that could support a small business?”

But another reader’s comment immediately quashed that idea. “No thank you,” that person wrote. “I would never see my dog again if she had a house like this!”


One video monitoring company exec weighs in on municipal video surveillance

Thursday, April 14, 2011

Recently, I've been doing some thinking about, reporting on, and writing about municipal video surveillance. Our upcoming source book is all about video surveillance. Our most recent poll is all about video surveillance. People sure do have varying and strong opinions.

We here at SSN received a well-thought out answer to recent Chicago-focused criticisms of the ACLU’s Illinois chapter from Iverify’s Mike May. Mike sent us a letter, part of which I used in the sourcebook but his thoughts are so compelling, I thought I’d post them up here for everyone to read in their entirety.

From Mike:

I am writing to comment on the position adopted by the ACLU regarding the City of Chicago video surveillance system. As a career security and law enforcement professional I have a deep and abiding respect for the constitutional protections that we as Americans enjoy. The world is fraught with example after example of human rights being trampled when adequate protection of people are not embraced as foundational principles of society.

The right to be free from unreasonable searches and seizures, the right to the quiet enjoyment of our lives and the freedom to exercise free  speech are all part of the bedrock of  American society. Those protections also extend to the rights of our citizens to live free of fear from crime, to  live their lives peacefully in their neighborhoods, and the right of our children to travel the streets of our cities without being victims of drug addicts, career criminals and predators.

We seem to have lost our way when it comes to the protection of individual freedoms. Our society has an obligation to provide a safe and secure community that is free of intimidation, where predation by criminals is prevented and where our families can go about their daily lives earning a living, gaining an education, participating in their community or enjoying their retirement without fear.

The ACLU has been a bright beacon for individual rights and the balance of governmental authority. I believe the ACLU needs to have its leadership walk the streets of Chicago, Detroit, Philadelphia, Cincinnati, and Columbus. Our core rustbelt cities are fighting a death struggle every day to maintain a semblance of freedom for its residents and its businesses. Our company works in the most challenged urban locations in the country and we see the impact every day to those folks who are working hard to make a living in the face of violent unconstrained crime.

The City of Chicago has established itself as a leader in the use of modern technology solutions in an effort to identify those involved in urban crime and terrorism. The ACLU should step back and thoughtfully look in the mirror and adopt a position that they are as concerned about the rights of the folks who strive to get by and make a living every day in our cities as they are about public positioning. Only then will they be living up to their name as the American Civil Liberties Union and could legitimately claim the moral high ground in this important dialogue.

Mike May

President and CEO


Check out the Video Surveillance Source Book for more on the civil rights story playing out in municipalities around the country.


Schneider bid $30b for Tyco? IControl raises $30m

Wednesday, April 13, 2011

Some say the leaking of the Tyco/Schneider news will not help the deal at all, but others clearly think the leaking–and rise in Tyco’s stock prices?—is applying the right pressure to the right people. I saw some interesting stuff last night on the potential Schneider/Tyco deal from the (UK) Daily Telegraph’s Ben Harrington, who is reporting that Schneider has made its bid, and has sent a letter of interest to Tyco’s US board. He says Schneider has been working with JP Morgan and Bank of America Merrill Lynch on the deal since September. Tyco, meanwhile, is working with GoldmanSachs, he said.

From the story: “JP Morgan, Bank of America Merrill Lynch and five French banks are said to be willing to provide a $13bn loan to Schneider to finance the transaction. The loan is likely to then be securitised. The banks are also willing to offer a $2.5bn bridge loan, which could be paid back at a later date with potential asset sales. Schneider has about $3bn cash on its balance sheet to contribute to the financing package.”

He says they’re sweetening the deal by offering Tyco chief Ed Breen a seat on the board of the combined companies. I just now learned that the WSJ and Reuters are reporting this as well. 

11 a.m. Here's an update to the Schnieder/Tyco story: Schneider says it’s not in discussions with Tyco

I’d reached out to Schneider’s press operation in France on Monday to see if they’d comment on the Bloomberg report, and hadn’t heard back until this morning, after I'd posted this blog. I received this press release from Anthime Capriol in their investor relations office.

“In response to market rumors, Schneider Electric announced today that it is not currently in discussion with Tyco International regarding a potential strategic transaction between the two companies. Schneider Electric stated that it would make no further comment regarding this matter.”

OK, I’m very curious now about how this is going to turn out ... Do you think it’s all a matter of how you define “currently”?

There's more financial news about iControl today. Our friends over at CEPro did some great reporting on fundraising efforts at iControl. Remember iControl? They’re the home security and management providers who merged with their competitors uControl in November. IControl has a partnership with ADT—which introduced its interactive Pulse product last fall, while new partner uControl has historically worked with broadband and telco providers. In a November interview, Paul Dawes and Jim Johnson told me that they’d be announcing a partnership “with a very large broadband provider” in the future. CEPro says the company is “gunning for the new Comcast Home Security business, which of course makes sense."

IControl is now seeking to raise $30 million. Of that, $28.5m has been raised, according to this April 8 SEC document, which CEPro kindly provides a link to in its story.

Further, CEPro points out that if you add this $30 million to the $45m they’ve already raised, you get $75m, which is roughly the same amount home automation company Control4 raised in 2010. Here's a link to the CEPro report. 


Smith & Wesson likes security—on the perimeter

Tuesday, April 12, 2011

Here’s an interesting new development from gun manufacturer Smith & Wesson: After just severing its ties March 31 with the Smith & Wesson Security Services dealer program, the company has announced that it has “rebranded its wholly-owned perimeter security division, formerly known as Universal Safety Response.”

The division’s new name is Smith & Wesson Security Solutions.

That announcement was made April 4 by Smith & Wesson Holding Corp., the parent company of Smith & Wesson Corp., a 159-year old company in the global business of safety, security, protection and sport. “The new name more accurately reflects the company's long-term heritage and leadership in security and protection,” the company said.

The rebranding announcement came just five days after the revelation that Smith & Wesson had severed its nearly three-year relationship with NationWide Digital Monitoring Co. effective March 31. The partnership had allowed NationWide to sell Smith & Wesson-branded security products, and NationWide contends the agreement was ended against its wishes and very abruptly by new management at Smith & Wesson.

The dissolution of the partnership has left the 70 dealers in NationWide’s dealer program with a short grace period—until April 30—to strip away the Smith & Wesson name from their security products such as advertising, trucks, uniforms, doorknob hangers and lawn signs, in which they have invested hundreds of thousands of dollars.

Is there a connection between Smith & Wesson’s ending of one security relationship and the rebranding of its perimeter security division?

Liz Sharp, Smith & Wesson VP investor relations, told me, “No.” She said the timing of the two developments is coincidental and unrelated. The two businesses are completely separate, she said.

Smith & Wesson has said little about the ending of its relationship with NationWide. Sharp has said only that Smith & Wesson wanted to protect its brand after the agreement failed to perform as expected.

The company strongly endorsed its perimeter security division in last week’s announcement.

In a statement, Michael Golden, president and CEO of Smith & Wesson Holding Corp., said, “We are excited about the opportunity to leverage our strong Smith & Wesson brand name in the perimeter security market. For nearly 160 years, our firearm products have come to represent safety, security and protection for law enforcement and security professionals, military organizations, and consumers both in the United States and abroad. Having a single, globally-recognized brand name allows us to extend that proposition to commercial and government clients seeking a trusted source for their perimeter security needs."

Barry Willingham, president of Franklin, Tenn.-based Smith & Wesson Security Solutions, said in a statement: “Our unique products have already earned a tremendous reputation with our existing customers.  We expect this rebranding to provide us new opportunities by differentiating Smith & Wesson Security Solutions in the competitive arena and better positioning our business to play a significant role in the global security marketplace.”