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Experts shine on TechSec stage

 - 
Wednesday, February 8, 2012

While sunny Florida hasn’t quite lived up to its billing—blue sky has been scarce, at least so far —the eighth annual TechSec, a two-day conference being held in Delray Beach, is definitely meeting expectations.

Many of the security industry’s top players are here, and the presentations and discussions have been lively. The monitoring world was well represented at Tuesday’s session, with Morgan Hertel, VP and general manager for Mace CS, and Jerry Cordasco, VP of operations for G4S Technology, among the presenters. Do video analytics really work? Is your cloud provider secure? Those were among the topics debated, with some energetic exchanges between the audience and the experts on the dais.

Day Two kicked off with William Rhodes, a market analyst for IMS Research, giving TechSec attendees a look at what to expect in video surveillance technology in 2012 and beyond. The rest of the day features sessions on implementing current vs. emerging technology in long-term projects; PIV (personal identity verification) being propelled into the private sector; and SaaS (software as a service) and ROI for the end user.

The conference wraps up with the next generation of security practitioners discussing new technology and how it will affect the industry. Four members of Security Directors News’ “20 Under 40” class of 2012 are on the panel, including Whit Chaiyabhat, director of emergency management and operational continuity at Georgetown University, and Christopher Chapeta, physical security specialist for Chevron.

I had the chance to talk with both of them yesterday, and for anyone in the security industry skeptical of those who have grown up with the Internet, cellphones and social media, I have good news: If these folks are typical of those who will guide the industry in the future, it’s in good hands.

For those who couldn’t join the TechSec this year, there’s always 2013. And you can get a taste of what you missed in the coming days in SSN. 

Problems at Platinum redux

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Wednesday, February 8, 2012

I wrote last week about Platinum Protection suddenly laying off most of its employees. I’m still gathering information about what led to that abrupt Feb. 2 action by the summer model sales company based in American Fork, Utah, and want to make sure I have as many facts as possible before publishing a story.

I’ve yet to hear from anyone at Platinum in response to requests for comment. I’m told by a knowledgeable company insider—an employee who was among some 600 corporate, sales, technical and other staff let go last week—that the company kept on five or six employees to try to figure out what to with about 6,000 accounts that Platinum kept in house.

However, this person said the company at this point doesn’t have the finances or personnel to continue with its plans to bring on about 25,000 accounts this summer, as it did last summer. “You lose your sales force, you lose your entire company,” the employee told me. Other summer sales companies are busy signing up some of Platinum’s former sales reps and technicians, the person said.

The person said a company owner announced to employees last Thursday, “I’m sorry to tell you this, but Platinum is closing its doors and all employees are terminated effective immediately and I’m really sorry this happened.”

The employee said: “People were bawling. They had never been through something like this before. They didn’t know you could have a job for years and all of a sudden they tell you, ‘Sorry, you’re done.’ … There’s no severance, no nothing.”

I’m still digging into whether this had anything to do with a recent lawsuit filed by the Securities and Exchange Commission, charging that the two men who provided the start-up capital for Platinum six years ago have been running a $220 million Ponzi scheme.

Platinum has stressed that Utah real estate magnate Wendell Jacobson and his son, Allen Jacobson, are no longer owners of the company, which was founded in 2006.

But what I’m hearing is that negative publicity generated by the lawsuit, filed this past December, did nothing to help Platinum financially.

I'll continue to report on this story. Stay tuned.

Bay Alarm expands

 - 
Tuesday, February 7, 2012

Bay Alarm of California, which says it is “the largest independently-owned and operated alarm company in the United States,” just got a bit larger, according to a news release.

Davis Mergers and Acquisitions Group of Long Grove, Ill. recently sent over the following tidbit:
 

Low Voltage Systems, located in Poway, Calif. has been acquired by Bay Alarm Company, with offices throughout California.

Doug and Kym Farkas were the owners of Low Voltage Systems. Doug Farkas will be staying on to continue to service custom-builder customers and to help grow the company.

Dorsie Mosher of Davis Mergers and Acquisitions Group, Inc. represented the sellers in this transaction.

I wrote recently here about Bay Alarm adding a new office and employees and its co-president being appointed by Gov. Jerry Brown to a state board overseeing alarm companies.

I’ll try to learn more from Bay Alarm about the new acquisition.

 

'Train the Trainer' in Vegas

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Friday, February 3, 2012

What happens in Vegas stays in Vegas.

That’s good advice for anyone who lets their hair down too far after the sun sets in Sin City, but it turns out central station managers attending ISC West can take something away from Vegas, too: certification as trainers.

Central Station University is offering the recently revised SIA-APCO Central Station Operator Instructor Course from March 25-28 at the Tuscany Suites and Casino. According to the CSU, the “Train the Trainer” course has been substantially updated to reflect changes in the industry.

“Central station technologies and procedures evolve constantly with the needs of our customers,” CSU President Dera DeRoche-Jolet said in a prepared statement. “We wanted to make sure the class reflects what current operator-trainees need to know.”

The course revisions cover newer monitoring systems, techniques for false alarm reduction, a more detailed explanation of alarm signal formats, and an expanded discussion of customer service.

For managers who can’t find the time to take the course in Vegas, a second session is scheduled in June in Orlando, Fla. Additional classes also will be offered later this year. For more information, call the CSU at 888-619-6970 or go to www.thecsu.org.

Problems at Platinum

 - 
Friday, February 3, 2012

Word is that Platinum Protection suddenly laid off almost all its employees yesterday. So, is the summer model sales company based in American Fork, Utah closing, filing for bankruptcy? And does this abrupt action have anything to do with a recent lawsuit filed by the Securities and Exchange Commission, charging that the two men who provided the start-up capital for Platinum six years ago have been running a $220 million Ponzi scheme?

The industry is abuzz with such questions since the massive layoff yesterday. I haven’t yet heard directly from anyone at the company about what is going on. But The Salt Lake Tribune reported yesterday evening that a company official confirmed Platinum had dismissed 65 corporate employees and its sales and technical staff, leaving only a small management team to service existing customers. The official wouldn’t give the reason for the mass dismissal, the newspaper said.

Regarding the SEC lawsuit filed in December, Platinum has told SSN that it was as surprised as anyone about the accusations against Utah real estate magnate Wendell Jacobson and his son, Allen Jacobson, and said the pair no longer has any ownership in the company. But could some sort of negative fallout from the case have impacted Platinum’s financing?

There are many more questions than answers at this point.

As for the layoffs, I talked yesterday to one of the employees just let go.

The person, who didn’t want to be identified, told me that employees had had “no warning whatsoever” of what was to come when they were called into a company meeting around 9:30 in the morning on Feb. 2.

The person said they were told company officials had made a decision “overnight” to close the company. Employees were told “we were free to go and they apologized for the inconvenience.”

There was “a lot of crying and emotion and shock,” the employee told me.

The person said that in addition to corporate staff, perhaps as many as 500 other employees lost their jobs.

The Salt Lake Tribune reported that one employee said company officials said they hoped to pay employees what salary they were owed within a few weeks.

But no severance packages were offered, according to the employee I spoke to. The company told employees they could file for unemployment.

“It’s a mess,” the employee said.

I'll continue to report on this story. Stay posted.

Object Video signs licensing agreement

 - 
Wednesday, February 1, 2012

There was an update today in video analytics provider Object Video’s patent licensing efforts. OV announced today that it has signed a global patent licensing agreement with Tyco Security Products’ American Dynamics business division.

You’ll recall that at ISC West last year, OV announced in April that it was suing Sony, Samsung and Bosch for alleged patent infringement

And, in June, it filed a complaint with the against the same companies with the International Trade Commission. That complaint seeks to bar Bosch, Samsung and Sony from importing and selling products containing software features and functions that allegedly infringe on OV’s patents.

OV CEO Raul Fernandez told me today that he can’t speak about the lawsuit, but he said the agreement with American Dynamics is the first of what he expects to be several similar agreements.

He said after the lawsuit and ITC complaints were filed, OV received “a series of inbound calls from [manufacturers] who wanted to understand the our licensing program.” He said there are “several negotiations ongoing [with manufacturers, but they’re not litigation-based negotiations” rather they’re manufacturers who have approached OV because “they’ve looked inward at their technology to see if there is a technology overlap with some of our patents.” This is OV’s preferred way to “approach licensing discussions but we are prepared to take another [legal] path if necessary.”

Fernandez said that the fact that Tyco is a “multi billion dollar, multi-national, multi-product line company that’s been in business a long time recognizes our innovations .. strengthens our case [for pursuing patent licensing] … it’s terrific for us.”

“Our American Dynamics business is developing a broad range of video analytics-enabled products,” said Warren Brown vice president of product management for Tyco Security Products. “As part of our pre-launch process, it was important to ensure that the growth we expect from these products would not be negatively affected by legal issues,” continued Mr. Brown. “This agreement with ObjectVideo gives us that certainty, allowing us to focus on the more important tasks of building great products that delight our customers.”

Asked how business is going, Fernandez said OV, which is privately held, had a good year with growth in its core software business and growth and backlog in its services side.

ADT runs afoul of California law

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Wednesday, February 1, 2012

ADT has agreed to pay almost $1 million to settle a civil lawsuit brought by the district attorney of California’s Contra Costa County over contracts ADT had with residential customers in which it reserved the right to hike monthly fees after the first year. That violated a California law requiring residential consumers get written disclosure of all costs upfront, according to the state.

District Attorney Mark A. Peterson, who announced the settlement this week, said that under the agreement, ADT has said it will follow the law for future contracts and, in addition to a $950,000 civil fine, will pay restitution to some customers whose monthly rate increased during their initial contract term.

Here’s a more detailed account from the Contra Costa Times on the settlement:

A national alarm company agreed to pay a $950,000 civil penalty and provide restitution to some customers to settle a lawsuit by the Contra Costa District Attorney's Office, which claimed certain contractual terms imposed upon customers violated California law.

District Attorney Mark Peterson announced the settlement Monday with Florida-based ADT Security Services, Inc., which sells home burglar and fire alarm systems.

ADT required customers to enter into two- or three-year contracts, in which the company reserved the right to raise monthly fees after the first year. The lawsuit alleged that by failing to advise customers how much the rate increase would be, ADT violated contract disclosure requirements in California's Unruh Act.

The lawsuit further alleged that termination fees for customers who discontinue ADT service could exceed the remaining balance of a contract obligation.

Under the terms of the settlement, ADT will conform its future California contracts to the requirements of Unruh Act, which requires written disclosure to residential consumers of contract terms. In ADT's case, that includes the total price for monitoring services for the initial term of the contract, disclosure of the number of required payments during that term, and disclosure of the amount of each monthly payment.

Tyco's Breen talks about new entrants, PULSE, ADT spin-off

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Tuesday, January 31, 2012

There were some interesting tidbits on today’s Tyco earnings call—about earnings of course, but also about new cable/telco entrants into the security industry, stats on ADT’s PULSE offering, and a progress report on the conglomerate's split into three, separate, publicly traded companies.

On the new entrants: In response to a question about how/if new cable/telco entrants into the security industry is affecting ADT, Tyco CEO Ed Breen said: “We track every market we’re in very closely, and we know where the cable guys are and where we’re competing with them [and the metrics in those markets where we have cable/telco competitors] are there’s no difference in those markets compared to any other markets.”
Breen said he feels “very good about our competitive position.” He said that the question of partnerships is a “question for the future” one that ADT will look into “if that opportunity makes sense.”

He didn’t mention that ADT is in fact, already partnering with Frontier Communications in New York.  Frontier Communications—which calls itself the nation’s largest provider of communications services focused on rural America, offering Broadband, Phone, Satellite television, wireless Internet data access, in 27 states. It has 15,200 employees—Frontier gave security a go four years ago, but then decided it wanted to partner with big nationals. It’s now partnering with Pro1 in Pennsylvania and ADT in New York.

Breen shared some stats on the PULSE product. ADT currently has 105,000 PULSE units in field. All of those have been sold by ADT’s internal sales force. The average monthly revenue for those units is $50, which is a nice bump from legacy ADT accounts which average $36 and the Brink’s/Broadview legacy accounts which average $33 per month.

The ADT dealer base has been in training for months and will begin to sell the PULSE product at the end of the current quarter (Q2). When ADT first started selling Pulse, the take rate was 14 percent, last quarter it was 23 percent and this most recent quarter it was 28 percent, Breen said. A 30-percnet take rate is the goal, he said “and we’re nicely on our way.” In addition, he said it’s “clearly a stickier account.”

Breen said the separation of Tyco into three separate companies is progressing, with most of the work centered on finance and legal considerations.

In this, the first quarter of 2012, Tyco finished reorganizing its reporting segments to align with its reporting and management structure. Breen said the company is “nearing completion in filling out he management teams and boards of directors for the three companies,” though no new personnel announcements other than the CEOs of the three companies (George Oliver, Commercial Fire and Security; Naren Gursahaney, ADT North America Residential; and Patrick Decker, Flow Control) have been publicly announced.

Tyco has filed its tax ruling requests, is getting ready to talk to rating agencies in Feburary (so is holding tight to its $1b cash reserve right now.)

In late March the company will file important statements: From 10s for the the spincos—ADT North amercia Resi and Flow Control, as well as the preliminary proxy statement –which will include pro forma info on the Commercial Fire and Security Company—which by the way, is losing the ADT name.

Breen pointed out that it still has the right to the Tyco and SimplexGrinnell brands and said that this company’s commercial customers know who they’re working with, so the loss of the ADT name for the commercial company, he seemed to imply, is not a big concern.

Oh, yes, and earnings:  Q1 revenue was $4.2b, which is down from the same time period one year ago when it was $4.3b. Its operating income was up—at $549m compared to $495m one year ago. Likewise, its operating margin was 13 percent, up from 11.3 percent a year ago. For the security segment, from the release: "Revenue of $2.2 billion increased 2% in the quarter with organic revenue growth of 3%. Recurring revenue grew 4% organically with growth in all geographic regions. Non-recurring revenue grew 1% with strong growth in Asia Pacific and Latin America partially offset by modest declines in the North America and EMEA regions. Operating income was $339 million and the operating margin was 15.7%. Special items of $36 million primarily consisted of separation-related impairment and restructuring charges. Operating income before special items was $375 million and the operating margin improved 70 basis points to 17.4%. The increase in operating margin resulted from faster growth in ADT's higher margin recurring revenue business and the continued benefit of restructuring and cost reduction activities."

And for the fire segment" "Revenue of $1.1 billion increased 3% in the quarter with organic revenue growth of 2%. Organic revenue growth of 8% in fire products and 2% in service partially was offset by a 5% organic revenue decline in systems installation due to continued softness in the non-residential construction market. Excluding the impact of foreign currency, orders increased 6% year-over-year and backlog increased 4% to $1.2 billion on a quarter sequential basis. Operating income was $144 million and the operating margin was 12.7%. Operating income before special items was $147 million and the operating margin was 13.0%. The 140 basis point margin improvement was driven by increased volume in products and a higher mix of service revenue as well as the continued benefit of cost-containment and restructuring actions."

Stanley execs talk about progress on Niscayah acquisition

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Monday, January 30, 2012

Stanley CSS’s parent company, Stanley Black & Decker exceeded Wall Street expectations last week with its earnings announcement.  It had Q4 revenue of $2.8b, up 17 percent over 2010 Q4 revenues, and organic revenue growth was up 6 percent over the same period.

The security segment was up 1 one percent with 4 percent organic growth in Convergent Security, according to the conference call. Security has Q4 sales of $827 million. That revenue figure is up 49 percent over last year (2010 Q4 revenues were $555m) —with most of the growth attributed to the acquisition of Niscayah.  Total 2011 Q4 sales for security were $2.6 billion compared to $2 billion in 2011.

With the Niscayah acquisition, “security makes up 30 percent of company revenues—up 23 percent from a year ago … Security segment profit was $129 million, up 37 percent and their profit rate increased to 18.5 percent, excluding acquisitions. The increase was driven by strong price inflation recovery, acquisition synergies and ongoing productivity initiatives,” Stanley Black & Decker CEO John Lundgren said in the conference call.

He said Stanley is still expecting to realize $45 million in cost synergies from the purchase of Niscayah. “It’s going to drive about $0.20 of accretion and about $35 million more in synergies in 2013. That’s the $80 million that we projected upon announcement of the acquisition.”

In terms of personnel changes as the result of the acquisition, Lundgren said: “Major upgrades to leadership are complete.” He said that acquisition brought with it “terrific strength in field tech and field sales and installation, both in Europe and the U.S. …so it’s a nice upgrade with the combined team.”

This quarter security’s “installation sales were up 12 percent globally, with monitoring RMR of 3 percent with a positive outlook,” Lundgren said. He noted the Niscayah’s operating margin rate “will continue to improve …but that it will continue to be a drag on the entire segment in 2012.”

Talking about the Niscayah integration, James M. Loree, Stanley Black & Decker COO, said Stanley is following the “HSM model … so that you have a nice blend of central oversight with the local regional management . And that’s going to take about 3 years to fully implement.” Stanley bought HSM in 2007 for $545 million.

Lundgren added: “we’ve seen the NIscayah model before, good business, too much installation, not enough recurring. We know what to do with that. And, Oh, by the wsy, we have a history with security acquisitions of improving margings uip to 400 to 1,000 basis points within two to three years … we’ve seen nothing [since announcing the acquisition] that would lead us to back off from that.”

Lundgren also pointed out two Niscayah strengths that Stanley will adopt and implement. He said Niscayah “is very good at recurring service revenue … maintenance, scheduled maintenance, prepaid maintenance …” and  “excellent talent” in “vertical market prowess .. particularly in financial services.”

Direct quotes are courtesy of www.SeekingAlpha.com.

Meeting targets non-response in San Jose

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Friday, January 27, 2012

The alarm industry was caught off guard at the end of December when the San Jose (Calif.) Police Department implemented a non-response policy for unverified alarms. Now the California Alarm Association is regrouping and is rallying members to discuss what comes next.

To that end, the Silicon Valley Alarm Association, a CAA affiliate, will be holding a lunch meeting next week, with the San Jose situation at the top of the agenda. The meeting is scheduled for 11:30 a.m. Wednesday, Feb. 1, at the Silicon Valley Capital Club in San Jose. Anyone interested in attending is asked to RSVP by calling 800-437-7658, Ext. 3, or by emailing the SVAA/CAA office at info@caaonline.org.

Sharon Elder, a police liaison for the Orange County Alarm Association, told SSN earlier this month that San Jose's new policy is similar to one adopted in Dallas several years ago. Dallas' policy has since been repealed because "it just doesn't provide good policing," she said.

Industry officials are hoping San Jose comes to the same conclusion. Concerned alarm company owners and city residents can learn the latest at Wednesday's session.

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