David Cote, chairman, CEO and president of Honeywell International, parent company of Honeywell Security, will be part of the President’s National Commission on Fiscal Responsibility and Reform, a bi-partisan panel charged with tackling the skyrocketing U.S. deficit. Members of the panel are named by legislative leaders on both sides of the aisle and the President.
Cote, a Republican, was named by Obama. Cote is also a member of the U.S.-India CEO Forum, which Obama asked him to co-chair.
Reports say Obama wanted to have Cote’s business perspective on the deficit reduction panel.
For those of you who don’t know yet, Sam is running and singing at the Security 5K. Not at the same time, he’s singing the National Anthem before running the race.
In a blog yesterday, Sam ruminated about different versions of the National Anthem. I would have just commented on his blog, but wanted to post a personal favorite.
Remember the old Naked Gun movies? Here’s Frank Drebin sitting in for tenor Enrico Pallazzo, who’s tied up in a back office.
I saw this interesting blurb in the NYT the other day about two young Wall Street titans—Chris Villar, 29, and Aaron Shumaker, 27—who left Goldman Sachs a couple years ago to start an alarm company.
They took all they learned at Goldman Sachs and brought it to McLean, Va, where the founded Frontpoint Security. They sell DIY alarm systems (GE and alarm.com equipment) and according to the Times story, “Mr. Villar, the chief executive, places the 50-employee company’s 2009 revenue at $5 million to $15 million.”
I was interested to talk to them for a bunch of reasons (well, what was it $5 million or $15 million?) How many systems are you selling to make that money? Who’s doing the monitoring? And, how did your Goldman experience help you set up a DIY sales process?
“They teamed up with a third partner, pooled the money they had made on Wall Street, tapped some angel investors and started FrontPoint Security in 2007. Based in Tyson’s Corner, Va., the company sells home and small-business security devices and monitoring services, emphasizing do-it-yourself installation and wireless control through P.D.A.s, cellphones and the Internet.”
Oh, and Villar said he hasn’t made any big mistakes with his business yet, with the exception of letting a crappy marketing consultant work for him for too long. He should have fired him sooner, he said.
Anyway, that’s all I’ve got for you on Frontpoint. I spent some time trying to reach them, which is not easy, since the only numbers and emails they have are for customer service and sales. When I did track down someone who does outside PR for them, I learned they don’t talk to the trade press.
You know those Broadview TV commercials? You know the ones I’m talking about. Even I know about them and I don’t even watch TV.
They’re the ones that feature preppy white guys and young women who live alone and who have frightfully poor taste in dates.
The ads have provided fodder for bloggers and comedians alike in the past few months, but now Saturday Night Live is getting in on the action.
What’s that they say about any publicity being good publicity? I’d agree, but of course, we know that the Broadview name will disappear pretty soon when they’re swallowed up by ADT.
AlarmForce, a super regional alarm company based in Toronto, with operations in North Carolina, Ohio, Georgia, and, as of Jan. 20 in Minnesota, announced late last week that its board of directors has approved the adoption of a Shareholder Protection Rights Plan, what’s known as a “poison pill provision.” The rights plan still has to be approved by shareholders within six months, and will be voted on at its annual meeting April 14.
I haven’t had a chance to talk to Joel Matlin, president of AlarmForce yet, but we’re supposed to catch up later on today.
Invented in the 80s as a device to prevent hostile takeovers, the poison pill provision is intended to make a hostile takeover way too expensive to carry out. It gives a company’s shareholders the ability to buy the company’s stock at a bargain price in the event that a hostile suitor comes calling.
The AlarmForce press release says that “the company is not aware of any specific take-over bid for the company that has been made or is contemplated. The rights plan is not intended to and will not prevent a take-over of the company.”
My friends in finance tell me that the poison pill is typically adopted when the board gets nervous because the stock is undervalued, because they hear rumors about a possible takeover or they’re actually concerned about a hostile takeover. Why don’t all companies adopt this provision? Well, it’s considered by many to be anti-competitive, to make a board and/or CEO a little too comfortable.
One person told me that a number of Canadian companies have decided to do this recently. I’ll be interested to learn the reasons for AlarmForce’s decision to adopt a shareholder rights plan.
AlarmForce’s recent financial results look pretty nice. It’s scheduled to release more financial results today after the market closes for its Q1 2010, which ended Jan. 31.
In late January its 2009 year-end financial records showed “record growth.” It’s a very thinly traded stock that’s trading today around 7.25, close to its 52-week high. Below are some highlights of its 2009 numbers compared to 2008:
Revenue 34,133,000 29,942,000 +14%
Gross profit 26,101,000 23,346,000 +12%
Operating cash flow 6,467,000 6,812,000 -5%
Operating cash flow
excluding working capital 6,718,000 5,176,000 +30%
Subscriber base 102,000 91,000 +12%
EBITDA(x) 9,057,000 7,218,000 +25%
Income before taxes 5,673,000 3,885,000 +46%
Net income 3,780,000 2,610,000 +45%
Net income per share 0.31 0.22 +41%
Diluted Net income per share 0.31 0.22 +41%
I had the chance to talk to Wright Thurston yesterday about his new venture Elevate Marketing Group. I’ll have more in a real story for next week’s newswire, but here’s a little preview.
Some of you may recognize the name Wright Thurston. He was one of the main partners in Firstline Security a summer-sales model company, out of Utah.
For a while a couple years ago, there was talk…more than talk perhaps, about Firstline merging with Pinnacle. That deal didn’t happen, and there’s still some legal wrangling going on with that.
Firstline is still in business in Utah, and being run by Thurston’s former partner, Trevor Keyes.
Back to Thurston: he’s still on the board of Firstline, but left the his position as CEO there at the beginning of 2008.
And he left Utah for OC. The new company is based in San Clemente, Calif. For the past two years, he’s been working on a “bundled services” offering sold across the country using the summer-sales model.
The services include phone, Internet and Dish TV. The company’s sold “thousands of systems” in the past two years but it’s been in a kind of beta mode. This year, Thurston says he’s ready to really launch Elevate big time. What may be of interest to you, my readers, is that this year, Elevate Marketing Group’s bundle will include Internet-based home security. (And IPTV in Q3, he says.)
They’ve got financial backing, but they’re looking for more and have partnered with Pepperwood Partners to do that.
Working with Thurston are other former Firstline executives including: Ben Ward, VP sales for Elevate and a former top VP from Firstline; Jordan Folsom, who’s doing training and marketing for Elevate and was the top sales rep for Firstline.
Broadview Security reported fourth quarter and year-end earnings this morning and “beat Street estimates.” Here’s Reuter’s take on the report
Brink’s Home Security Holdings Inc (CFL.N) posted a better-than-expected quarterly profit, helped by higher margins and an increase in its subscriber base.
For the fourth quarter, net income rose to $17.8 million, or 39 cents a share, compared with $14.8 million, or 32 cents a share, a year ago.
Revenue rose 8 percent to $145.4 million. The company’s subscriber base grew 4.4 percent.
Analysts on average expected earnings of 29 cents a share, before special items, on revenue of $145.9 million, according to Thomson Reuters I/B/E/S.
Operating profit margin for the latest fourth quarter was 18.9 percent compared with 18.3 percent last year.
The increase in margin was due to the reduction in royalty rate charged to the company by its former parent and higher profits from recurring services on the larger subscriber base, Brink’s said.
Shares of the company closed at $41.20 Tuesday on the New York Stock Exchange. (Reporting by Divya Sharma in Bangalore; Editing by Anne Pallivathuckal)
I’m back to security after a week of school vacation fun with the fam. Lots of stuff to weed through in my inbox, but I came across this interesting announcement from last week.
Mike Snyer, former ADT president and a 30-year employee of ADT, has stepped back into security for the first time since leaving ADT in 2006 for a post at Vonage.
I haven’t met Mike Snyder, but I’ve heard from lots of people that he’s well liked and respected in the industry.
So where’d he go? Proximex, a “PSIM” software developer, announced last week that Snyder has joined its advisory Board. (PSIM is an acronym for physical security information management; it refers to software that controls and integrates disparate physical security systems.)
In its announcement, Promixex notes that Snyder joins Bill Crowell, former Silicon Valley CEO and NSA deputy director, who became an Advisory Board member last month.
From the release:
“Together, the Proximex Advisory Board brings extraordinary expertise in the areas of both physical and logical security.”
“I’m very impressed with the Proximex strategies to deliver the best in PSIM today while preparing companies for future security integrations,” Snyder said in a prepared statement. “This company has a unique ability to provide exceptional system deployment and customer service while bringing PSIM benefits to the business level by extending the life of major portions of embedded security expenditures and, thereby, stretching budgets and making security purchases last longer. Proximex is also looking ahead to guide companies on integrating information from other business applications and systems. I believe that focusing on the customer is an integral part of success so I look forward to helping Proximex expand and deliver on these important market strategies.”
Snyder started at ADT as a sales representative, and held several management positions, culminating in the role of president and COO for North America in 1997, a position he held for nearly ten years.
More from the release:
During this decade at ADT, Mr. Snyder grew revenues more than 6-fold along with industry-leading levels of free cash flow and operating income. Utilizing an aggressive and balanced strategy of direct and indirect distribution, numerous acquisitions, market segmentation and new product development, ADT grew its customer base within North America to more than 6 million customers. In addition, the ADT Call Center and Service Strategy was developed and deployed, resulting in the highest customer satisfaction in company history.
“We’re extremely pleased that Mike agreed to join our Board,” said Jack Smith, chief executive officer for Proximex. “Mike’s experience with physical security technology, customer acquisition and retention, and strategic program development is hard to beat, and we look forward to his strategic insight, practical guidance and leveraging the relationships that he has built. With both Mike and Bill’s guidance, Proximex will continue to deliver on the needs of the physical security market.”
It was another fine Barnes Buchanan conference at the end of last week. The conference sessions ended on Friday, but there was golf and tennis on Saturday and a number of people I talked to were heading down to the Superbowl.
Thanks to a big blizzard in the Capitol Region, flights to Philly & DC were getting cancelled right and left on Friday. That had a lot of Barnes attendees contemplating sitting out the storm in Palm Beach.
I managed to re-route my flights and get back to Maine on Friday night. I wouldn’t have been exactly heartbroken to tough it out at The Breakers for a couple more days, but I was eager and very happy to get home.
So the mood on Friday, what with people getting snowed in at Palm Beach and all, was sunny. And the mood overall, especially compared to last year, was pretty peppy as well.
CapitalSource’s Bill Polk wrapped up his talk on this up note: “Transaction economics are getting much more favorable and buyers are ready to step back into the market. Specialty lenders remain willing to advance at levels perceived to be highly risky by generalist lenders.”
And, while Mike Barnes reported a slowdown in sales and installation (13 percent overall) and a resulting dip in revenues (8 percent mostly from larger systems integration companies– which was expected. Revenues remained flat or dipped only slightly for the traditional security alarm segment.) He had good news as well: “It’s irrefutable that the RMR base is up and that’s really good news for the industry.” He predicts an increase in M& A activity.
I’ll have more on Polk’s and Barnes’ talks in stories on the web site over the next couple days, but here are some show tidbits:
I checked on the attendance numbers, and they were indeed up. There were roughly 200 attendees this year, last year there were about 165.
I mentioned before, that I was pleasantly surprised to see a few more women in the audience. I learned that half of (Devcon CEO) Robert Farenhem’s four-person executive staff is female. I met Kimberly Marcil and Ann McDonald, and I’m happy to have two more names to add to my contact list for next year’s Women in Security special report.
More on Devcon: John Gilligan of Golden Gate Capital (the San Francisco private equity group that bought Devcon last fall, and that owns Pinnacle Security) spoke during one of the sessions. He’d been to his first Devcon board meeting on Wednesday and said that Robert had presented 25 possible acquisition opportunities–a combination of companies and books of accounts–to the board. Gilligan said they “ranged from $5,000 in RMR to a million in RMR.” He said to expect to see a series of acquisitions by Devcon “over the course of the next 6, 12 to 18 months.”
Back to the attendance numbers, Mike Barnes told me that he thought more people were sitting in the sessions—instead of making deals in the hallways—this year. Maybe that’s because there were more financial folks who are taking a new look at the industry.
At dinner on Thursday, I sat with Todd Miller, an attorney with Akerman Senterfitt, Brian Dettmann of Morgan Joseph, some of the Devcon people and some of the Pinnacle people. I had a chance to meet Kelly Walker, Pinnacle Security president in person for the first time.
Pinnacle just announced last month that it would be the first to use a new interactive touch screen it helped GE develop. At dinner Kelly showed Todd and I how he can see live footage and control systems at his cabin in the Utah mountains from a dining room at The Breakers. I’ve seen this kind of technology before (2GIG’s GO!Control; Honeywell’s Total Connect) but it’s usually been on the show floor or at a conference exhibit space.
Kelly was also among a few people who told me they’re gearing up for the Security 5K at ISC West. Hooray.
In case you haven’t heard about it, It’s a fun run that’s taking place Thursday morning, March 25. All of the money raised goes to a great cause–Mission 500, which sponsors needy children. Click here for more details. You can register the day of the event. But you should register online now to make it easier for you and organizers.
Kelly said he’s been challenged in the Security 5K by Andy Lund, Pinnacle’s Director of Sales Support. The terms of the wager were not released, but Kelly and Andy apparently had a preliminary showdown on the office treadmills last week, and have a rematch scheduled for next week.
Any one else out there stepping up to the challenge?
We’ve just listened to presentations by four company CEOs:
Brett Bontranger, Stanley Convergent
Robert Kleinman, AFA Protective Systems
Terry Olah, Alarm Detection Systems
Rich Perry, Security Networks
Now, Tom Buchanan leading a roundtable discussion. One note, since I can’t type nearly as fast as Sam, there’s some paraphrasing in my live blogging.
Tom: Can you talk about the last 12 months’ affect on attrition on your residential business?
Rich: We always see a bump around the holidays. Last year we were concerned that it would keep going up. We were pleasantly surprised that it didn’t.
Terry: We had an uptick of about a half percentage. When you look at components, you can divide attrition into two: Those who move, which can recapture; and those who don’t move. We saw higher percentage of attrition with those who didn’t move.
Tom: Robert, on the commercial side?
Robert: We were surprised, we had one significant loss-a big customer, but if you take that out, attrition was less than last year …. Another thing, our customers were paying their bills, if they left that was not the reason.
Tom: Did you delay any business initiatives in 2009, that you will ramp back up in 2010?
Robert: We didn’t delay initiatives
Terry: We didn’t ramp back any initiatives. We moved forward with some technology initiatives such as managed access, video monitoring.
Tom: Did you change the way you approached the market?
Rich: No. Our affiliates run their marketing their own way, and I didn’t see any big changes.
Terry: We continued what we were doing. We expanded some marketing on the technology side. You’ll find us on Facebook and Twitter, though that hasn’t had a material impact on sales yet.
Tom: What about different areas of the country that were particularly hard hit?
Robert: New Jersey and Florida were hit hard. Indications as of the end of January, are that thing are getting better.
Brett: There’s been softness in Central California, Vegas, Detroit, and Florida. Even in those areas, we’ve done a good job knowing where the fish are.
Tom: What about employees? Did you have an uptick in layoffs in 2009?
Brett: We had layoffs on G&A side last year with volume down. We right-sized in field. It was a difficult decision. I don’t [anticipate further layoffs] in 2010. But, the market is far from recoved in our view. It’s Something we watch in regular basis.
Tom: What about salary freezes or reductions?
Rich: We froze salaries, which was a little diffiicult to explain in some ways because we were hiring. We blamed it on our banks. (laughing) In all seriousness, even though we were growing our business, were concerned about attrition. At the end of the year, salaries were unfrozen and we paid bonuses.
Terry: As positions turned over, we were able to keep some people by reassigning positions and responsibilities in some cases. That way we were able to get thorugh year without layoffs and with no reduction in benefits.
Tom: Bill Polk mentioned state and local communities being hit hard and not have ability to print their own money like the feds. Are you finding that communities are looking for new ways to tax the security industry, with false alarms? security taxes?
Terry: Not so much with false alarms. A more disturbing trend, in Chicago, a lot municipalities have alarm-company owned equipment at municipality. Typically, the alarm companies collect a fee. More recently there’s been interest and movement in a couple cases of municipalities want to own their own equipment. In the case of fire alarm, the wya to mandate that monitoring be done there.
Rich: We’re licensed in 34 states. It’s a constant struggle to keep up with what they’re doing. So far, it’s been more of a nuisance than anything else, but we’re keeping an eye on it.
Robert: I think they’ve been doing a good job for a whiile figuring out how to tax us.
Tom: What about the crime rate. There are reports that it’s up and then down. What’s your experience?
Robert: There has not been an increase.
Rich: There’s a perception of crime going up. There’s more fear, and from marketing standpoint that’s helped.
Tom: Have you cut back on charitable giving?
Brett: We didn’t cut back. With as many branch offiices as we have, we do a lot of charitable events and we do a lot of community activity. It’s one thiing that bonds our offices. It’s something we promote and plan to continue to do in 2010.
Robert: We haven’t cut back on the dollar amount. We’ve been more selective where we give dollars. That’s were we’ll be for the future.
Tom: What examples do you have of positive things in 2009?
Rich: We grew substantially in 2009, and we worked on solidifying our infrastructure.
Terry: We had more tech time available to us, so we had more time for training. As a result of reassigning some positions instead of layoffs, there was more teamwork, camraderie with employees. Our employees truly appreciated that.
Robert: Our employees were grateful that they have job … We started calling vendors to renegotiate rates and they did renegotiate.
Brett: We grew profits organically. We did lot of acquisitions and got them successfully integrated. We’re sitting in a nice position going into 2010.
Tom: ADT announced the Broadview transaction. How will it impact the industry and your businesses?
Rich: It’s a direct competitor. It’s nuetral and probably positive.
Terry: It’s one less competitor in the door on some alarm systems. It can’t hurt. It’s probably helpful.
Rober: We’re not in the residential business, but if biz, but if ADT has integration problems anything similar to what it had with Wells Fargo, it will lead to customer dissatisfaction. And it may affect their commercial business because (with this transaction) they’ll be perceived more and more as a residential company.
Brett: I don’t have anything to add.
Tom: There will probably be some layoffs. Will you activley target Broadview employees, as it’s been suggested in the press.
Brett: Actively target, no. But we’re always looking to hire good talent.
Tom: What about the impact on ADT and Broadview dealers?
Rich: Those dealers may be nervous. We’ll see what happens, it may present opportunities for companies like ours.
Terry: In my estimation, Broadview ran first class operation, people may have been expecting a more premium price [than mid 40s]. I expect that the multiple that’ll be paid for P1 will be substantially less than Broadview. So, the Broadview transactioin creates a new standard in today’s market, one less than crazier numbers we’ve seen in the past.
Robert: I agree with some of that. But, when we did acquisitions, we look at what that acquisition meant as a fit for us. [Multiples paid for do not necessarily] set a mark for us.. What an acquisition would mean for us is the prime determinant of the price.
