ADT Hammered Again, Loses Another Billion In Market Cap

By: John Honovich, Published on Mar 16, 2018

ADT's CEO told investors that [link no longer available], 'in baseball terms', ADT was batting 5 for 5.

But investors told ADT's CEO, 'in baseball terms', that he was being demoted to Triple-A.

Just 2 weeks after ADT lost a billion in market cap in the wake of the Amazon / Ring deal, ADT lost another billion in market cap after announcing their full 2017 financials. In 2 months, ADT has gone from an expected share price up to $19, to pricing their IPO at $14, to opening at ~$12, now down to $9.

In the midst of this fall, they have acquired 2 security integrators, most notably the non-merger with ASG.

What is happening to ADT? Is acquiring commercial security integrators the solution? We examine these questions inside.

***'* *** **** ********* that [**** ** ****** available], '** ******** *****', ADT *** ******* * for *.

*** ********* **** ***'* CEO, '** ******** *****', that ** *** ***** demoted ** ******-*.

**** * ***** ******** **** * ******* in ****** ***** *** **** ***** ****** / **** deal, *** **** ******* billion ** ****** *** after ********** ********* **** **********. ** * ******, ADT *** **** **** an ******** ***** ***** up ** $**, ** pricing ***** *** ** $14, ** ******* ** ~$12, *** **** ** $9.

** *** ***** ** this fall, **** **** ******** 2 ******** ***********, **** notably ******-****** **** ***.

**** ** ********* ** ADT? ** ********* ********** security *********** *** ********? We ******* ***** ********* inside.

[***************]

ADT ********** *** *** *******

***** ***'* *** ***** analogies, **** ** ***: ADT ** **** * company ** **** ******** **** perfecting *** *** ******* while ********* *** ******* at **** ***** *** Internet. *** ** ******* focused ** ********** *** traditional ******** ***** *** the ****** ** ******** disruption.

Optimizing **********

*** ** ***'* ********** team's ******** ********* ** that **** *** ****-**** veterans ** *** ******, or ** **** *** it, *** "********’* **** proven ****." *** **** are ******* ** ***** strengths, ******** ** ********* operations *** ********** **** cash **** ****** ******, as***** **** *****:

 

** ***** ********** ** believe **** *** ******* on ****, ** **** have **** *********** ** ******** and ***** ** ****.

Disruption ** **** ********* - ******, ***.

*** **** **** **** investors *** ** **** tech ********* *** ***** to ********* ***'* ****** business *****, ********** ** how ************* ********* ***'* management **** *** **** it ***** *** **** companies **** ******** ** with * ************* *********, lower **** *****.

***'* *** ** ********* *********** ***** the ****, ** ** told * [**** ** longer *********] ****** ******* analyst **** ******'* **** was ******** *** ***:

** ** **** ** predict *** **** *** how **** *** **** companies *** **** ***'* business *** ********* ********** fear ********** ********** ***** 'crappy' ******** **** ********** and **** ********** ******* to *** ***** ***** they *** *** *** heart ** ********* ********* like ***.

Irony ** ****** ******** *********** 

************, ********* ******** ******* rightfully *** ********** ****** down **** ******** *********** as * ******** **** much ***** ********** *** much **** ********* ******. For *******, **** ** ADT's ****** **** ***** currently, *** ***** ****** at ~*.** *****, ******* integrators (*.*.,*** ****** / ********* deal** *.** *****), ********* get ******** ** * fraction ** ****. *** intrusion ******** ******* ** command ******-**** ********* *** higher ******* ****** ******* for ****.

** *** ** ****** security *********** ** * hedge ******* * ******** collapse ** *** *********** residential ******, ** ***** make ***** *************. *******, it may *** ** * very **** **** *** ADT's *********. *** ******** integration ****** ** ************ just *** ** *********** rewarding ** *** ********* one.

Big ****** ** ******** *********** *** ***

*** *** ******* **** might ******* *** ******** integration ************ ** ** they ******** **** ****** growth ***** ** ******** integration. ***'* *** ******** as **** **** ************* *** ***********:

**** ** *** ****** names *** **** **** the ********* *** *** Nike *** ***** ** that **** ** *** country. *** ** ** bring *** ******* ************ across *** ******* ** bear? ** **** *** been * *** **** of ****** *** ** in *** ********** ***** 

** *** *** ***** stealing ******** ********** ******** from ******, **********, ***., by ********* ***** **********'* expertise *** ***'* ********** *****, it ***** ******** *********** growth and ******* ** ******** in ***'* ****** *********. It **** *** ** simple ****** ** *** technology *** ********** ** commercial ******** ******* **** their *********** ****. ***********, it ** ** ***** something **** *** *** attempt ** **** **** with ********* ******* ** their **** ******** ******** model.

Comments (5)

As a further example of ADT Executive Management being disconnected or actively ignoring the reality of the industry:

Tim Whall's comment to the analyst that DIY systems are 'less sophisticated' residential systems than those installed by ADT/Incumbents is just wrong, and his own company offers an inarguable example, one he vaguely hints at in followon comments:

In many cases, these options are the exact same systems.  For example, ADT is private branding 2Gig Intrusion Panels with embedded SmartThings hub for sale as DIY systems in electronics retailers. (ie: $400 at Best Buy)

This equipment is the same stuff 'professional' companies install in houses every day.

ADT is surely in the middle of the forest - the home consumer is sold peace of mind and he decides where and how and to what extend that is. The DIY market is clearly gaining grown with advances and lower pricing in technology. False alarms policies are requiring verification prior to dispatch which in turn requires authorization from the homeowner. The time for verification can be saved on the homeowner getting the alarm conditions to their phones and other designated phones for a fraction of the costs.

ADT's stock dropped another 60 cents ($500 million in market cap) in the past week, stock now down to 8.10 per share.

Will be interesting to see where it goes from here. Is ADT really in this bad of shape or is the market overreacting?

They really are in that bad of a shape, probably worse actually.

 

ADT still sliding. Dipped to $7.36 this week. ADT not alone. Remember Monitronics/Moni, the other big public traded monitoring company. Traded this week at $3.30, from high of $88 several years ago (no splits). We believe investors now understand the business models, not just the raw financials, and are asking how to slow attrition without predictable police response, and without full disclosure to the customer.  ADT has several million basic deterrent systems, that are often considered nuisance alarms with slow or no priority police response. Moni has about one million. Customers do not like to hear these facts. An earlier IPVM comment compared these systems to fax technology in the internet world. ADT has some really good stuff, but the anchor is bigger than the lifeboat.

Source: Lee Jones; Support Services Group; LeeSSG@att.net

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