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Why Investors Like What They See in Security

Publicly-traded security companies, and the industry as a whole, sustained positive performance throughout 2013. Drivers included higher than expected uptake in residential interactive systems, video surveillance’s ongoing sizzle, plus sizable gains in the acceptance of wireless electronic locks and access control.


Actionable Intelligence Is Making Big Leaps

To deal with an avalanche of information — Big Data — large agencies and organizations are increasingly leveraging communications intelligence and investigative solutions to gather evidence and generate actionable intelligence. Thus, reflecting the need to make sense of unstructured data from multiple sources.

2013 CE Stock Winners & Losers

2013 was a great year to invest money in consumer electronics stocks. Overall, the average stock price among the 39 companies tracked by SSI’s sister publication CE Pro rose a very healthy 42%, beating the 2012 increase of 37%.

Since the end of 2011, these 39 stocks have increased a combined 50%. Only five of the 39 companies reported decreases in stock prices in 2013, including Control4, which is being compared against its IPO opening price on Aug. 2. The big winner in 2013 was retailer Best Buy, the No. 1 company on the CE Pro 100, an annual ranking of top companies in the space. The stock was pummeled in 2012, down 50%. In 2013, Best Buy rose an incredible 238%, going from just under $12 per share to over $40.

The other big winner in 2013 was VOXX Int’l, makers of headphones, soundbars and car audio components. The company’s stock rose 142% in 2013. Other strong performers included Panasonic (up 97% after being down 28% the previous year), Universal Electronics (93%), and retailer HH Gregg (92%). Likewise for Harman, which had 82% growth in 2013.

On the downside, Samsung was the worst performer, down 15%, followed by ADT (down 13%), then Control4 (down 11.5% from opening price). The only other losing stocks last year were LG Electronics (down 6%) and JDS Uniphase (down 5%). Besides Control4, the only other company new to the list is IMAX, which launched its $2 million Private Theatre system in June 2013.

On the display manufacturer side, things were better last year than in 2012. Sony had a nice comeback year, up 56% after dropping 38% in 2012. Sharp was up 3% after a drop of 64% in 2012. Planar showed growth (up 78%) compared to last year’s tough 25% drop. Both Comcast and Time Warner were big winners for the second year in a row. The stock prices for these cable giants that are now in home automation are up 117% for Comcast and 112% for TWC over the past two years. — Jason Knott, Editor, CE Pro

Two publicly-traded companies in this realm, Nice and Verint, each posted strong stock performance in 2013, as they capitalize on increased momentum with enterprise customers. In Verint’s case it sells actionable data analytics modules to workforce management centers and security surveillance groups, mainly governments and secured cities programs. Nice specializes in security, customer interaction and financial monitoring solutions to optimize business performance and respond to security events.

As software has become increasingly essential to companies like Nice and Verint, physical cameras have become less and less important to these firms. One reason for this is the sheer number of camera companies in the marketplace. Pure play camera manufacturers like Axis, Mobotix and Avigilon are affected by their ability to provide clearer and more easily used video technology at competitive price points, and most importantly, into systems that are more easily integrated into the end user’s demands.

Such is the common theme running through the entire space. Large integrators such as Tyco Integrated Security, Diebold and Siemens are all fighting over how easily they can install a technically complicated system and still be able to provide the highest and most customized solution for the end user.

Axis, which posted good numbers in 2013 even though its revenue growth has been slowing due mainly to its increasing size, has begun to diversify into services offerings like video surveillance as a service (VSaaS) as it sees it may not be able to protect its gross margins over 50% in cameras forever. Again, this results in part from the flood of camera providers coming from the Far East, as well as competition from increasingly higher megapixel offerings and megapixel/analytics offerings by providers such as Avigilon and Arecont Vision.

The move to VSaaS — which has not been altogether profitable to date — is also being fueled in an attempt by manufacturers to make cameras more relevant to small businesses. Overall, video surveillance can be referred to as a big winner. Observers see the sector as a 10% to 15% growth industry.

Smart, Wireless Locks Are Gaining Wider Traction

Possibly flying under the radar more than any other area of growth in security is the slow but deliberate replacement of legacy mechanical and electro-mechanical locks as end customers move toward networked locks.

These smart, electronic locking systems feature an encrypted wireless communication protocol linked to an online electronic access control system. Leading players here include Allegion; HID Global, an Assa Abloy company; Kaba; and Tyco’s Software House.

In the case of HID, now a $950 million giant, its lofty position has been achieved through recent acquisitions, including ActivIDentity, Codebench and IdenTrust. Allegion is the $2 billion spinoff from Ingersoll Rand.

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About the Author
Rodney Bosch
Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.
Contact Rodney Bosch: rbosch@ehpub.com
View More by Rodney Bosch
Acquisitions, Managing Your Business, Stock Market


By George Saucedo on March 6, 2014

Rodney,
Do you know anything about the Locksmith industry?
Please feel free to call me at 915-549-9997 to discuss.
Note: I am not a telemarketer! I am a locksmith AND a serious investor.

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