Would You Buy Arecont?

JH
John Honovich
Jun 18, 2016
IPVM

The company, not the products.

As we reported recently, FLIR seriously considered purchasing Arecont but bought ISD.

Arecont raised $80 million in debt a few years ago to pay their founders / execs but still is open to being acquired (of course, at the right price).

The company does have its strengths (its still one of the leaders in multi-imagers) but also its historical quality and reputation challenges.

Vote below and comment inside.

U
Undisclosed #1
Jun 19, 2016
IPVMU Certified

Would You Buy Arecont?

At the right price, no. :)

U
Undisclosed #2
Jun 20, 2016

"At the right price, no. :)"

Even as a joke it does not sound right

JH
John Honovich
Jun 20, 2016
IPVM

I think he's implying that there is some reasonable price a purely financial valuation would put on Arecont (i.e., just looking at its past 3 year's income statements, balance sheet, etc.) and, at that valuation, it does not make sense to buy Arecont. Assuming that is the case, I agree with 1.

The problems with buying Arecont is (1) an unusable brand and (2) a declining market position, which makes a purely financial valuation overvalue Arecont.

(1)
(1)
U
Undisclosed #1
Jun 20, 2016
IPVMU Certified

It didn't start out as a joke. Here was my thought process:

(7)
U
Undisclosed #2
Jun 20, 2016

Thank you for funny answer :)

U
Undisclosed #1
Jun 21, 2016
IPVMU Certified

Tell me it's coincidence that their new product pipeline went down the tubes right after they got their bailout?

V.P. Sales: Congratulations sirs, on your successful cash raise! Related, I wanted to put forth my strategy to counter the China threat; which shows how a re-invigorated Arecont can aggressively target the marketplace with a generous R&D budget and associated marketing, that will yield advanced, groundbreaking technology, which in turn will provide us a substantial revenue stream; and a clear path forward for the firm.

Head Honchos: That's interesting, but... what we're thinking is, China is unstoppable, the industry is shot; therefore instead of foolishly giving back our earnings by a plan such as yours, we will just shutdown everything except production and "milk it" for everything it's worth for a couple more years, or until somebody figures out how to slap 3 sensors in a single dome.

(1)
JH
John Honovich
Jun 21, 2016
IPVM

I think the bigger constraint is their FPGA architecture.

  • Why don't they have a smart codec?
  • Why are they so limited on frame rate?
  • Why is their low light so poor?

The common theme is likely that they use FPGAs (Xilinx) when almost all their competitors are using Ambarella and Ambarella chips have zoomed past what Arecont can do on their own and given their constraints.

There was no doubt that 5 - 10 years ago, Arecont's FPGA approach helped them be first on MP H.264 but that same approach has now boxed them in.

Beyond the brand and Chinese competitive issues, the decline of the competitive advantage of their core proprietary technology is a big negative in buying them.

(1)
U
Undisclosed #1
Jun 21, 2016
IPVMU Certified

I think the bigger constraint is their FPGA architecture.

A bigger constraint than what? Their R&D budget?

Are you say they have been spending genourously and trying to re-invigorate but it's just too hard given their arch? Or that they didn't even try because they are technologically hamstrung?

JH
John Honovich
Jun 21, 2016
IPVM

I do not know how much they are spending on R&D budget so I can't speculate on that.

I am saying that, as it is, for whatever reason, lack of spending or lack of capability, their FPGA approach is getting beat badly now by Ambarella for higher resolution / higher performance / higher frame rate.

Avatar
Sean Nelson
Jun 21, 2016
Nelly's Security

the only thing they got going for them is "made in USA" so yeah I think itd be worth it, but definetely needs some restructuring from their customer service experience and perspective

(1)
U
Undisclosed #1
Jun 22, 2016
IPVMU Certified

FLIR could always use another camera company.

UI
Undisclosed Integrator #3
Jun 27, 2016

Arecan't

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