ACTi Financial Results 2011 Examined

By John Honovich, Published Jul 17, 2011, 08:00pm EDT

A few years ago, ACTi was widely acknowledged (including by us) as one of the leading growth companies in the IP video surveillance market. Over the last 2 years, a clear and worrisome trend emerged of slowing product development and market progress.

In this note, we examine ACTi's financial results from 2009 - 2011 that confirm the challenges the company is facing.

Let's review key financial data points:

  • ACTi had $1.05 Billion NTD sales in 2009. This is approximately $36 Million USD, a fairly sizable amount for the IP camera market during that time that put that among the world's top selling IP camera providers.
  • In 2009, ACTi's reported operating margins were 19%, indicating strong profitability equal to or higher than companies like Axis and Mobotix.
  • In 2010, ACTi's revenue only grew ~12% to $1.17 Billion NTD. This is approximately $40 Million USD.
  • At the same time, 2010's operating margins dropped to 11%, still fairly profitable though much lower than in 2009. This is especially noteworthy because the general trend in 2010 was rising operating margins as the macroeconomy recovered / stabilized.
  • For the first 6 months of 2011, ACTi's revenue is flat year over year compared to the same time period in 2010, putting them on pace for ~$40 Million USD in 2011.

Readers may review ACTi's income statement and 2011 interim results.

On the one hand, flat to slow growth can be interpreted as simply standing still, a result that many large scale incumbents would be happy to achieve in the last few years.

On the other, ACTi is an IP surveillance only company in a market segment that is growing ~30% per year in this time frame. Simply matching the market growth, ACTi should be at roughly $60 Million USD in 2011, a number they are almost certainly will not hit.

Worse, in this time frame, their main geographic and market subsegment rival, Vivotek has doubled their revenue. In 2009, ACTi and Vivotek's revenue was fairly close. Now, Vivotek is on pace to be twice as large as ACTi - an outcome many would have that impossible a few years ago.

It remains somewhat of a mystery how a company doing so well in a growing market could stumble this badly. From an external viewpoint, the two most striking signs were the precipitous decline in new product releases and the rise of the marauding booth babes (though the former is much more likely to have a practical impact than the latter).

Going forward, some financial improvements from ACTi are likely to be expected. While ACTi pre-announced their 4MP lineup very early, the cameras are now shipping and should help ACTi regain some ground. At the same time, ACTi will need to aggressively expand and update their product development to keep pace with direct competitors like Axis, Arecont, Vivotek, etc. who have released far more products than ACTi in the last 2 years.

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