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Security well positioned amid global crisis: ADT

The global economy has taken a serious stumble, but the security business may have a decent chance of being able to stay on its feet, according to one industry leader.


November 18, 2008
By Neil Sutton
Neil Sutton

Topics

Naren Gursahaney, president of ADT Worldwide, said that there are
forces at work in security which may present some opportunities for
security companies and professionals during this time of economic
strife.

“When you compare security to other industries, I think we’re very well
positioned,” he said, speaking at the Securing New Ground conference,
held in New York City, Nov. 11-12.

Crime won’t rest during a bad economy, he said. In fact, it may
experience an upswing. While this may not be good news for the world in
general, it could be a boon to security. Skimming – the use of a
illegal data gathering device on an ATM machine to “skim” customer
financial information – is just one example of a growth area crime.

“These trends are out there, they’re growing and they create opportunity for the security market,” said Gursahaney.

The financial gurus who also spoke at Securing New Ground seemed to
agree with Gursahaney that the future of the security industry may be
brighter than most.

“The security industry really is one of the calm ports in the storm,”
said Bill Polk, managing director of commercial lender CapitalSource
Inc.
, based in Chevy Chase, Md.

The message was that companies like ADT and Tyco (ADT’s parent) have
healthy cash reserves, and may be in a position to make some strategic
acquisitions at a relative bargain.

Gursahaney wasn’t forthcoming on ADT’s acquisition strategy, only to
say that “Cash is king right now,” and “We’re selective. We’re looking
for new capabilities and technologies.”

He said he anticipates accelerated consolidation in the industry. “The
challenge right now is, how do you even evaluate an asset for
acquisition?”

“Security is probably one of the most compelling markets today,” said
Robert Chefitz, general partner at Egis Capital Partners, based in
Woodbridge, N.J. He added that consumer interest in physical security
is on the rise, and traditional security providers may be able to eke
out decent margins.

The presence of a new breed of security companies – like Intel, which
has released a compelling home health solution – is also a good
indicator that the industry is moving in the right direction. Intel’s
monitoring device uses “telehealth” technology to allow doctors to
review a patient’s condition (like heart failure, diabetes and
hypertension) remotely over an Internet connection.

“When you see companies like Intel coming in . . . it certainly
reinforces a lot of the business that you’ve been in,” said Chefitz.

The increased presence of IT in security products will create new
opportunities, said Gursahaney, citing examples like video analytics
software, long range iris recognition, mesh networks and
service-oriented architecture (SOA), a business process based approach
to software development and deployment that has gained popularity in
the IT community in the last four or five years.

“How do we apply these . . . to customers?” said Gursahaney. “That’s really what the name of the game is.”

Another concern for Gursahaney in the home market was potential
competition from telcos and cable companies, who already have a
presence in the home through the provision of phone, TV and Internet
service. One way to forestall a battle for consumer dollars and
attention may be to partner with these companies, he said.

Overall, said Gursahaney, “I still think the economics prospects for this industry are outstanding.”


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