Dedicated Micros Revenue Declines Continue 2011

In the middle of the past decade, Dedicated Micros built itself into one of the leading surveillance recorder manufacturers in the world. Since then, the company has steeply and continuously declined. In this note, we examine UK financial records documenting the extent of Dedicated Micros's fall.

In 2006, at the company's peak, annual revenue was 83.7 Million GBP (~$130 Million USD) - a very substantial sum for an independent surveillance manufacturer. However, by the middle of 2010, annual revenue had sunk to 54.5 Million GBP (~$85 Million USD) a decline of ~35% over the 4-year period.

Let's dig into some financial details to better understand their performance:

• Gross margins were ~57% in 2010, actually higher than 2006 when they were ~54%
• However, operating profit was nearly non-existent in 2010 while it was nearly 10% in 2006
• Between 2010 and 2009, revenue fell another 11% continuing a trend of year-over-year declines
• Total employees have declined from 675 in 2007 to 523 in 20, a decline of 22%
• Our reading of their financial results indicates that overhead/fixed costs have not declined sufficiently to match the decline in total sales

Analysis

While the market has been challenging for all CCTV incumbents, Dedicated Micros, in particular, seems to have lost its way. The company has campaigned hard against IP, launching a strange closed IP offering. We now most commonly hear about them when they run press releases of their CEO as a race car driver.

In fairness, perhaps we do not understand the UK market, which is the most hostile in the world to IP. Nonetheless, at some level, Dedicated Micro's results speak for themself. They are quite poor even relative to their CCTV peers many of who have at least managed to stay relatively flat over the last few years.