Avigilon COO Schmode OUSTED

Author: John Honovich, Published on Sep 02, 2015

IPVM called for Avigilon's COO to be fired last week.

Today, he is gone.

In this note, we examine the factors behind this and what this means for Avigilon going forward.

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Comments (49)

John Honovich

IPVM | 09/02/15 12:46pm

As one competitor just summised to me, this is 'good for Avigilon, bad for the rest of the industry'...

John Honovich

IPVM | 09/02/15 12:57pm

Another manufacturer quipped, "Nooooo! With Schmode out, that makes it harder to compete against Avigilon!"

Undisclosed #1

09/02/15 01:36pm

I hear DvTel is still hiring.

Avatar

Mark Jones

09/02/15 01:38pm

The "empowerment" remark is dead on. Fear and micro-management are impediments to growth. There should be more fresh air for everyone in that organization today.

John Honovich

IPVM | 09/02/15 01:55pm

AVO stock is down ~5% on the opening, at $13.37. Last year high: ~$34.

John Honovich

IPVM | In reply to John Honovich | 09/02/15 04:40pm

Stock is now down below $12.50, down 11% today.

This signals that many investors did not truly understand the internal problems at Avigilon (or that they really love Schmode and are scared that he is gone, which is very unlikely).

As others have said, I do think there is upside both for the company and the stock. However, it could get worse before it gets better, especially since Q3 numbers are likely to be below projections (maybe significantly), which could put more pressure on the stock.

I suspect they will, sooner rather than later, hire a new COO. At nearly 1000 employees, it would be hard for anyone to do it all alone. This is where I think someone like Axis' Fredrik Nilsson or other politically savvy industry veteran would fit well. Will see...

Avatar

Luis Carmona

IPVMU Certified | In reply to John Honovich | 09/02/15 05:09pm

1. I'm sure the extreme bear market probably also has a bearing on the stock price; it can't help but not almost. But also based on comments I've seen on some of those stock boards for security products in general, a lot of investors buy into the hype perpetuated by the "CSI" effect, pumping the stock price up, then when they realize the planes not quite taking off the tarmac like they expected, they start dumping. The near exodus of executive level staff can't have helped.

2. Can IPVM call for ASIS to offer me the CEO position? That's sweet paying deal.

John Honovich

IPVM | In reply to Luis Carmona | 09/02/15 05:14pm

North American stocks are overall up today so it is not the market driving Avigilon down 10%+.

I can tell ASIS to absolutely not hire you. That might be more effective :)

Undisclosed #3

In reply to John Honovich | 09/02/15 05:38pm

If investors only knew of the chaos and toxicity Schmode created within the company, the SP would be higher. In an attempt to control infomation getting to Alex and protect himself, Schmode mandated that all operational decisions (hiring, pricing, external email content, presentations, marketing collateral etc) had to be "approved" by him. This worked to inflate his ego and made sure everyone knew he was the path(?) to getting anything done - but it worked in the exact opposite way. The approval chain should add value - whether it is double checking for accuracy or adding valuable content. Schmode did none of that - he was the bottleneck everywhere.

If I had some cash sitting around, I'd invest today. A Schmode-less future at Avigilon is a bright future.

Undisclosed #2

In reply to Undisclosed #3 | 09/09/15 08:44pm

In an attempt to control infomation getting to Alex and protect himself, Schmode mandated that all operational decisions (hiring, pricing, external email content, presentations, marketing collateral etc) had to be "approved" by him.

Is it only coincidence that after the departure of one "Bryan", we see the re-emergence of another "Brian"?

In any event, welcome back B.K.!

Undisclosed #2

09/02/15 02:13pm

"Look Bryan, its either you or me, and I own the company, so..."

Undisclosed #2

09/02/15 02:21pm

Bryan will provide consulting services to the Company to ensure business continuity over the next year.

"We would be glad to accept your resignation, if you would be willing to offer one".

Avatar

Mark Jones

In reply to Undisclosed #2 | 09/02/15 02:33pm

Complimentary of course.

Undisclosed #3

In reply to Mark Jones | 09/02/15 02:39pm

Obligatory press release statement. Alex will not want or need anything from Bryan.

Undisclosed #1

In reply to Undisclosed #3 | 09/02/15 02:45pm

Agreed. They said the same basic thing when Keith Marrett was pushed out.

Undisclosed #3

09/02/15 02:32pm

I don't typically like to hear about people's lives being disupted, but in this case - I cannot get rid of the smile across my face.

Well done Alex - your employees (current and former) and investors thank you! Having just spoken with several Avigilon employees this morning - they all feel a huge sense of relief and very hopeful for a bright future once again. Schmode was the 'cancer' within Avigilon and it has now been removed. There will be side effects and other Schmode vestiges that will still need to be dealt with, but the main tumour is gone.

In an industry as tight as security - I'd be surprised if there is still a bridge Schmode hasn't burnt to the ground.

Unfortunately it probably took a lot of investor/company money to exit this tumour. Money which in my opinion is not deserved by someone who took glory in firing good people, undermined his peers at every opportunity, deceived many of his employees, manipulated Alex for so long and was generally an untrustworthy a##hole.

Stock might take a little hit today, but overall and longer term, this is incredible news for Avigilon, its employees and investors.

Undisclosed #3

09/02/15 02:35pm

Kudos to IPVM for bringing this forward and getting Avigilon to talk about the elephant in the room - and doing something about it. Investors and employees of Avigilon thank you John.

Undisclosed #2

09/02/15 02:48pm

"You can't fire me!"

"Why not?"

"Honovich just predicted it!"

"Good point. You're fired next week, ok?"

John Honovich

IPVM | 09/02/15 05:45pm

Also, the SVP of Global Operations Collis Heath also 'left the company' as part of the same streamlining. It was in the press release.

Related, we hear that Avigilon is saying that Schmode's departure is not performance related...

Undisclosed #1

In reply to John Honovich | 09/02/15 06:18pm

Related, we hear that Avigilon is saying that Schmode's departure is not performance related...

Right, he left for "health reasons".

I also heard they had him sign a "Must Compete" agreement, he only gets full severance if he agrees to take his management skills and style to a close competitor.

John Honovich

IPVM | In reply to Undisclosed #1 | 09/02/15 06:55pm

The knives are out today...

Undisclosed Manufacturer #4

In reply to Undisclosed #1 | 09/02/15 07:23pm

Health reasons? I guess that could be true if you consider the cost of body guards in Vegas and the payout if they don't do their jobs.

Can't help but think that today (or maybe later this week) will be a perfect time to "stock" up on AVO, also.

EJ Nemec

09/02/15 05:58pm

Having personally dealt with Schmode, I can say... looooooooooong overdue.

My initial thought was this is a positive move for Avigilon, an obstruction was removed. Whether it translates to better products and more sales will have to be seen. I can say I'm not going to recommend their products just because he's gone.

But after some additional thought, maybe this is isn't a positive but a huge negative. I remember watching a link where an analyst discussed Fernandez's reputation as controlling and overbearing. I specifically recollect he used the word "crazy" to describe him. (I'm pretty sure it was posted on IPVM, I searched for it, maybe someone can post the link for it again.)

So did Fernandez just make a positive move by ousting Schmode or is it a negative so he could have more control? That does seem to match the analyst's description and validate what's wrong at Avigilon. Just my thoughts/opinion.

John Honovich

IPVM | In reply to EJ Nemec | 09/02/15 06:05pm

EJ, here is the post you are alluding to: Avigilon 'Questionable Management' / 'Authoritarian' CEO. The quote you are specifically referencing is "The problem with the company is the guy who runs the company is a bit crazy"

So, yes, there is definitely a risk that Fernandes put into direct management of Avigilon could be like Schmode. After all, Fernandes repeatedly promoted and leaned on Schmode for years. So either he was blinded to how Schmode acted or he supports that approach somewhat.

EJ Nemec

In reply to John Honovich | 09/02/15 08:43pm

Thank you John, that was it. I watched it again.
For those that don't want to wait the Avigilon segement starts at 3:25.
At 3:55, in addition to "The problem with the company is the guy who runs the company is a bit crazy" (wow that's a statment in itself) the other negatives about Fernandez:

-"doesn't like to listen to other people"
-"questionable management"
-"revolving door"
-"authoritarian"

In my opinion, it seems like all of those apply to Schmode leaving.

The Canadian stock market closed up 63.25 at 13,545.25 but Avigilon closed down 1.63 at 12.37--so the market doesn't seem to like to change.

Undisclosed #2

09/02/15 06:00pm

New anonymous Glassdoor review spotted.

"Former employee."

Pros: Excessive compensation, Fiefdom creation encouraged, "Foundation of Fear" friendly, consistent ruthlessness rewarded, panoramic views, yearly office party, fresh fruit, spa.

Cons: Sweat shop. Expected to do the work of 5 EVP's. Suggestions from Upper Management routinely dismissed by Upper, Upper Management as being unworkable even barbaric. HR department. Shareholders. No real commitment to intimidation. More shareholders. Buck passing options limited. Parking pricey.

Advice: Not for everyone

Avatar

Hal Bennick

In reply to Undisclosed #2 | 09/02/15 06:21pm

You win the internet. All of it.

Avatar

Luis Carmona

IPVMU Certified | In reply to Undisclosed #2 | 09/02/15 06:26pm

Parking pricey.

Ahhh, the days I used to pay for parking at a corporate company. <sigh>

Undisclosed Integrator #5

09/02/15 07:26pm

Good or bad long term, it sure seems the concensus is that it had to happen. The IPVM article essentially advocating his ouster was prescient beyond belief. I propose IPVM make more recommendations as to what other companies should do.

My question is -- how much of this executive turnover at Avigilon and other companies is a direct result of the downwards pricing pressure introduced from overseas?

John Honovich

IPVM | In reply to Undisclosed Integrator #5 | 09/02/15 08:31pm

"how much of this executive turnover at Avigilon and other companies is a direct result of the downwards pricing pressure introduced from overseas?"

I think the Avigilon moves/issues were overwhelmingly because of their aggressive goals (specifically $500 million by 2016). When you prioritize revenue growth over everything else and the growth numbers needed are so much higher than what the industry overall does, it creates an environment where short-term focus on numbers causes long term stability / operational issues.

Undisclosed #2

09/02/15 10:51pm

John Honovich

IPVM | In reply to Undisclosed #2 | 09/02/15 11:08pm

Wow, that is his actual new LinkedIn profile....

Undisclosed #1

In reply to John Honovich | 09/02/15 11:08pm

Denial is a powerful drug.

Undisclosed Manufacturer #6

In reply to Undisclosed #2 | 09/02/15 11:13pm
Maybe he can get a job in the body paint division....

Undisclosed Manufacturer #7

In reply to Undisclosed Manufacturer #6 | 09/03/15 12:40am

My bet is he will go to Vicon. Eric doesn't have the juice to revive the cold Vicon body alone.

John Honovich

IPVM | In reply to Undisclosed Manufacturer #7 | 09/03/15 12:42am

I'll take that bet. Loser buys the winner a Glengarry Glen Ross DVD, in honor of Schmode.

Undisclosed Manufacturer #7

In reply to John Honovich | 09/03/15 01:30am

Deal, I get until ISC-West. That seems to be when the circus goes to Vegas anyway.

Undisclosed #2

09/04/15 03:34pm

A.F. Bryan, as you know we would prefer to resign, rather than fire you, and so are willing to consider a reasonable exit package to insure a smoother transition. Do you have a number in mind?

B.S. Yes actually, I do. The number is 7,923,923.

A.F. I said reasonable, you know the street would have my head if I parted with that kind of cash.

B.S. I don't want your cash, silly! I want USPTO #7,923,923. And we'll call it even...

A.F. Wait a sec, I have an idea...

John Honovich

IPVM | 09/04/15 11:04pm

Update: Schmode has now retired, or so says his newest LinkedIn profile:

Michael Miller

In reply to John Honovich | 09/04/15 11:16pm

Its starting to look like your stalking him.

Undisclosed Manufacturer #9

In reply to Michael Miller | 09/09/15 05:36pm

*you're

Undisclosed #2

In reply to Undisclosed Manufacturer #9 | 09/09/15 06:03pm

**It's

Michael Miller

In reply to Undisclosed #2 | 09/09/15 06:23pm

Sorry for the grammer mistakes I was paying more attention Avigilon quotes I was working on.

John Honovich

IPVM | In reply to Michael Miller | 09/09/15 08:04pm

The best way to honor Schmode is to make your Avigilon quota this quarter. Keep working!

Michael Miller

In reply to John Honovich | 09/09/15 08:08pm

We beat our "quota" for the year a month ago.

John Honovich

IPVM | In reply to Michael Miller | 09/09/15 08:15pm

Awesome, you continue to prove you're Avigilon's most loyal dealer!

Undisclosed #1

In reply to John Honovich | 09/09/15 08:24pm

Awesome, you continue to prove your Avigilon's most loyal dealer!

*you're

Michael Miller

In reply to Undisclosed #1 | 09/09/15 08:34pm

^^I am going to print that screen shot and frame it.

Undisclosed #8

In reply to John Honovich | 09/05/15 07:20pm

Unofficial Schmode response: "I'm Going Out In Style"

"You may bury me with an enemy on Mount Calvary,

You can stack me on a pyre and soak me down with whiskey,

Roast me to a blacked crisp and throw me in a pile,

I could really give a $hit, I'm going out in style!"

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