Arecont CEO And President Resign

By: John Honovich, Published on Apr 18, 2018

This is good news for Arecont.

Arecont's problems have been well known for years (e.g., most recently Worst Camera Manufacturers 2018 and starting with Worst IP Camera Manufacturers 2011). Many have wondered why can Arecont not fix this? Now they have fixed a core problem.

Co-founders Michael Kaplinksy and Vladmir Berezin have resigned, respectively from being CEO and President, clearing the way for Arecont to improve and resolve problems. The challenge will be whether they have enough time and resources left to undo the damage done.

In this note, we examine the resignations and the outlook for the company.

Good ** *** **-********

*** ******** ************ ** the **-******** *** ***********. As ****, **** *****-***** expertise ** ******* *******, the **-******** ********* **** to ******* *****-**-****** ********* cameras **** *.*** (*** **** ******* ** this **** ** ***** ago). ********, **** **** able ** ******* **** at * ***** ***** cost **** ***** (***-*******) rivals ** *** **** - **** ***. *** combination ***** *******'* **** initial ****** *** *** something **** ******* ***** not **** ************ ******* the **-********. ***** **** indispensable *** *******'* *****.

Bad ** *** **-********

*** ********** *** **** was *** **-*** ******* Kaplinsky, ** ** ** still ******** ******* ** LinkedIn [**** ** ****** available], *** '*****' ** Arecont:

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

** ** *** ** much *** ***** ***** days, ***** ** **** examine *****.

*** *******, ** ********* by **** ******* ********* and ******** **** *** years *** *****, *********, and ************* ** *** the ******* ******** ** the *******. ** ******* accounts, ******* *** ****** profitable *** ******* **** for **** *****, ** the ********** ****** **** spun *** ** ****** simply *** ****** **** or *** ********* ***** how **** ****** **** going ***********.

Schafer **** ***

******* ***** ******* *** Arecont ****** ******** *******, *** ****** EVP ****** **** ****. *******, ** ****** of '*******' ** **** as *****, ****** ** deal **** *** ***** problems *** ******* *****, compounding **** **** *** own *********.

Industry ******** **

** *** ********, *** industry ****** ** ** many ******* ***** ***********. With *** **** ** Ambarella *** *********, ***** for ** ******* ****** better *** **** *********. With *** **** ** Chinese *************, ******* ** cameras **** ****. **** the **** ** ****** everyone ******** *****-*******, *******'* lead ** **** ******** declined.

Holding ** ********* ******* *** *** ****

***********, ********* *** ******* have ******** '****' **** the '********* *******' ** Arecont's ******* ********** **** notes:

*** *** *** ***** executives ** *** '******* company' ***** *** ****** in**** **** ******* **** on $** ******* ** debt. ******* ** *** size ** *** **** raise, *** **** ******* has * *********** ****** on *******. ** ** unknown ** ** *** much *** ** **** form *** **** ** executing **** ***** *** our **** ********** ** that *** **** *** some ****, **** ** indirectly, ** ********* ***** executive *******.

Calderon *******

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

**** ******** [**** ** longer *********], ****** ******** ** *** and **, **** *******'* ****** last ****, ******* ***, to *** **** ** our *********, ** *********** operating ** *** ** the *******.

******** ** ********* *** liked ** ******* ****** we **** ****** ** since *** ********* *** viewed ** **** **** Arecont *** *** ******. And **** *** ************ of *** **-********, ** gives ******** *** *********** to **** *** * true ***** ***** *** an *********** ** ******** re-brand *** *******.

Challenges ******

***** ** *********** **** to ** **** *** there ** *** ***** of **** *** ************ and **** **** ** be ****, *** ***** which ** ** *** know *** *********** **.******* ***** ** **** itself **** ****, *** **** ****** of ******** ******** **** the *****, **** *** not ** *******. **** Calderon *** *** ********* Arecont ********** **** *** do *** ******* ** be ****, *******, ***** free ** *** ******** of ***** ******* *** now ********* *** ****** steps ** *** ***** direction.

Comments (17)

Not to be pessimistic, but why do you think that these resignations are anything more than just titular in nature?

Were they actually running the day to day operations, and have now stopped?

Moreover, if that’s the case, might Kaplinsky’s avaricious tendencies be accelerated as he is still a likely equity holder?

I think it's more than titular based on sources close to the company. My understanding is that they have now stopped running operations. As for 'acceleration', Kaplinksy's equity is likely hemmed in by the debt and the bank's covenants.

Thoughts on their new VMS (Contera) and Cameras?  

The VMS is an OEM arrangement with OpenEye.

The Contera NVR and Cameras look like run of the mill Chinese OEM stuff.

Overall, the Contera line does not appear to have much Arecont-specific technology or influence in it, which is probably a good thing.

We were preparing a post on Contera but given this news have delayed on that. We do plan to test both the cameras (which Arecont says runs their firmware) and the OpenEye / Arecont VMS in the next few months.

which Arecont says runs their firmware

I would be very interested on the details behind this statement. Has Arecont managed to attract and hire some industry veterans on the engineering side that have previous experience writing optimized, secure camera firmware? Or, did their legacy FPGA guys, who have been developing cameras with "no linux OS" for the last decade+ suddenly take a crack at rolling out their first rev of linux-based firmware for commodity hardware? Also, it seems unlikely that Arecont wrote new firmware from the ground up, all things considered for the state of the company and the choice to move to OEM hardware.

By "runs their firmware" I suspect they mean "made some minor customizations and changes to code provided by the Chinese OEM".

As ex-employee of Arecont, I can say it was a fun company to work in. It had innovations. I found Michael and Vlad to be a good(not necessarily nice:-) ) people. Unfortunately, Michael did not have enough strategic vision. 

Good luck Raul!

Note: this is a moderately educated guess, not sourced -

The bankers, given the significant debt position, have significant control over the operating company and can dictate who runs it (i.e. the founders resigning). However, the founders own the holding company, and can maintain their positions there even though they can be 'resigned' from the operating company.

Evidence supporting this:

  • The loan was made to Arecont the operating company (see 2014 AV SEC filing), not the holding company.
  • The holding company was created March 2014, a month before the SEC filing discloses the $80 million debt.
  • The founders still list themselves as executives in the holding company.
  • Holding companies are often created to protect owners from operating company issues (e.g., 1).

Anyone have contrary interpretations or insights to share?

This is more a trip down memory lane for me than anything else.  I remember my days at GE Security when Michael, Vlad, and Steven Sarfati came in and pitched Arecont cameras for us to OEM (which GE Security did do briefly circa 2005-06).

I remember listening to Michael's vociferous discussions on megapixel camera pricing while having libations on the 2nd floor of the Arecont booth at ASIS in 2008.

Though I never thought Michael was the right guy to take Arecont to the next level, as history has now borne out to be true, I always liked him, and respected and admired both his brilliance and his energy.

I wish Raul and the Arecont team the best of luck as they close this chapter and move forward.

...as they close this chapter...

Which one, 7 or 13?

;)

too bad they had a great product at one time - I don't think this is a good sign.

I have no insights into the internal financing, operations or politics of Arecont.  With that said, if their quality problems are even one tenth as bad as it sounds here on IPVM forums/comments then Raul Calderon is the right person to right the ship.  He's an outstanding, proven operator!  If he truly has the means and the authority, then I have no doubt Arecont will be stabilized and well positioned for their next phase of growth within 12 months.

I wish Raul and Arecont well as a diversity of healthy, stable, geographically diverse manufacturers is good for the industry and continued innovation.

Starting in 2007 and over the following several years we purchased Arecont cameras. Immediately out of the box we had problem after problem but because they were the only multi lens camera on the market at the time we continued with them. 

However after four years we finally realized that Arecont would never turn around and produce a reliable quality camera. Within the next couple months we will have replaced all of our Arecont cameras with Axis 3709 or 3707's. 

Why in the world would anyone risk buying an Arecont camera when there are so many other multi lenses cameras out there that have proven reliability??? 

As I see it Arecont was on the cutting edge and a trail blazer but it  is insignificant and irrelevant today. Their reputation is about as good as Hikvision and will eventually go under which they sorely deserve for treating their customers like crap.  

Their reputation is about as good as Hikvision

Not to go all 'Marty Calhoun' on you, but....

While they both have reputational challenges, the causes are much different. Hikvision has not had significant imaging quality or hardware failure issues. Hikvision treats many of their customers very well including significant interaction and social events.

Hikvision's reputational issues in this industry come from their scorched earth pricing / marketing tactics, their Chinese government ownership, cybersecurity issues, etc.

John, I think you make a good point that it is a different "kind" of bad reputation than Hikvision's. I'm sure Undisclosed 5 meant that Arecont had a bad reputation as low as Hikvision's and did not mean the same "kind" of bad reputation.

With that being said, I can understand people wishing most of the employees well and do not wish anyone to suffer an economic and maybe self-esteem hardship losing their jobs over something the leaders of their company did, but I can understand the frustration of those burned by selling and using Arecont products.

Undisclosed 5: Why in the world would anyone risk buying an Arecont camera when there are so many other multi lenses cameras out there that have proven reliability???

I think this says it in a nutshell. You don't buy cameras from Calderon, nice guy that people say he is. You buy they from Arecont, and Arecont has been nothing but a frenemy to dealers and customers for years.

I can understand the frustration of those burned by selling and using Arecont products.

#6, as can I. Arecont / Calderon has to deal with that head-on.

As an example, I talked to an integrator at ISC West last week who was having problems. Evidently, that integrator spoked to someone on Arecont's staff, mentioning IPVM's coverage of Arecont. The integrator told me that staff person started to criticize IPVM and make excuses. This is a common Arecont refrain.

No doubt, if I was an Arecont customer with real problems and Arecont made excuses, it would be very frustrating.

Let's see what Arecont does now.

I am baffled why integrators are still using Arecont on new installs. The multi imagers are now industry standard and everyone else has them. I’ve seen their cameras out in the field and they have always looked sub par compared to everyone’s megapixel cameras even when they working properly.  Arecont has always been a terrible company to deal with and I’m glad we didn’t ever buy a single one of their cameras.   

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