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ADT’s move into commercial security, fire

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Wednesday, March 26, 2014

Will ADT move into the larger commercial security market when its non-compete expires with Tyco?

I contacted ADT to see if I could talk to someone about it. Cheryl Stopnick, director of dealer communications, responded, and told me that ADT's not going to discuss business plans at this time.

They may not be discussing plans, but it certainly seems like they’re making them.

Right now ADT does commercial security for small businesses, which ADT defines as those businesses that are 7,500 square feet or less. ADT and Tyco came up with that definition when ADT spun off from Tyco. At that time it entered into a non-compete agreement with Tyco Integrated Security. That agreement expires Sept. 30, 2014.

As Luis J. Orbegoso, president of ADT’s Small Business Unit, said during a Dec. 6 investor call (according to seekingalpha.com), the “ADT brand has supported not only small businesses but also medium and enterprise businesses for almost 140 years. And our current definition of a small business as a location that is 7,500 square feet or less is somewhat arbitrary and not necessarily a true reflection of the market. It was actually the result of our non-compete zone improvement with Tyco, which expires in 10 months.”

Orbegoso knows commercial security. He joined ADT in 2013. Before that he was with UTC for five years, where he led the commercial security business (though I think he held a few titles while he was there, which seems to be the norm for the security folks at UTC). He came to UTC as part of the GE Security buy.

During the Dec. 6 conference call, (again, according to seekingalpha.com) Orbegoso said “once this noncompete expires, we will have the ability to take a look at possible adjacencies, such as commercial fire solutions and larger commercial and enterprise security offerings that we can integrate and leverage with our existing infrastructure and customers. These adjacencies could potentially quadruple our addressable markets. And again, today we are extremely encouraged by the momentum that we have in this space and our ability to execute.”

The potential is definitely there with the larger commercial projects, according to the folks at Imperial Capital. Jeff Kessler estimates that the security market in businesses smaller than 7,500 square feet is $2 to $3 billion, but the the market segment that includes businesses that are 7,500- to 25,000 square feet is an $18 billion to $20 billion market segment.

I spoke to some folks in the industry (aside from TycoIS) who currently do work in that market segment and they fully expect ADT to jump in to that market.

And while it’s an opportunity, not everyone believes it's an $18 billion-plus opportunity. It may be on paper, but one integrator told me “that’s a segment that’s been stuck in neutral for a lot of years.”

The commercial fire business, on the other hand, if you can get the right people on board—and ADT certainly has the resources for that—could be a more immediate opportunity.

Orbegoso has instituted many changes in the way ADT approaches security for small businesses. It was typically treated as a kind of  “extension of residential security,” but that’s the not the case any more. It will be very interesting to see how Orbegoso and ADT approach this new, larger, more complex market segment.

There may be disagreement about market segment size, but there’s general agreement that ADT has the potential to have some meaningful impact in this segment.

HID Global at ISC West    

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03/25/2014

AUSTIN, Texas—Secure identity solutions provider HID Global will demonstrate its latest secure identity solutions and emerging technologies that leverage Bluetooth LE and NFC at ISC West.

Kratos wins $7.8 million contract

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03/25/2014

SAN DIEGO—Kratos Public Safety & Security (PSS) division on March 19 announced it received a new $7.8 million critical infrastructure security system contract award.

Small chain upgrades to IP at own pace

Virginia’s Quik-E Foods points to high ROI
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03/24/2014

LYNCHBURG, Va.—Family-owned and operated Quik-E Foods, based here, recently installed an IP camera in the rear of one of its 12 convenience stores. “The camera actually paid for itself on day 2,” said Quik-E Vice President Todd Burgess.

Reorg at IdentiSys

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03/18/2014

EDEN PRAIRIE, Minn.—IdentiSys, an integrator specializing in identification, card issuance, emergency response, and access control security systems, in early March announced several organizational changes

Millennium hired in Ft. Lee

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03/18/2014

FORT LEE, N.J.—The Fort Lee school district in early March hired systems integrator Millennium Communications Group, to purchase and install a surveillance system at six district schools, according to a report in The Record.

Is Avigilon in a buying mood again?

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Tuesday, March 18, 2014

Avigilon will soon have more cash for purchases.

The HD surveillance provider on March 17 increased a previously announced financing to $100 million (Canadian).

The official statement said that the “company intends to use the net proceeds from the offering for general corporate purposes and for potential strategic acquisitions.”  

I have a call in to Avigilon to see if they'll comment on why they're increasing the financing.

The offering is expected to close just after ISC West this year “on or about April 8, 2014,” the company said.

The financing, “a bought deal offering of common shares of Avigilon,” is an expansion of a previously announced bought deal offering for $69 million, which was announced in November, just before Avigilon acquired VideoIQ on Dec. 31.

Under the terms of the expanded financing, a “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 and PI Financial Corp. have agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, an aggregate of 3,448,280 Common Shares at a price of $29.00 per common share for aggregate gross proceeds to Avigilon of $100,000,120,” the announcement said.

The syndicate may purchase an additional 517,242 shares at the same price up to 30 days after the closing. If that happens, an additional $15,000,018 will be raised, and Avigilon’s gross proceeds will be $115,000,138.

Nazarenus new president of iTech Digital

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03/03/2014

INDIANAPOLIS—In February, iTech Digital, an integrator and manufacturer of video surveillance solutions, named Mark Nazarenus as the company's new president.

Hikvision and ObjectVideo sign agreement

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03/03/2014

HANGZOU, China and RESTON, Va.—Video surveillance provider Hikvision announced March 3 that it has signed a worldwide patent licensing agreement with video analytics provider ObjectVideo.

Diebold adds three

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02/24/2014

CANTON, Ohio—Diebold in February added three new executives to its leadership team: Rob Raymond, as vice president, global financial sales; CJ Dailey, as VP of electronic security installation operations; and Michael Campbell, as VP, sales operations and development of E

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