No strangers to the benefits of subscription businesses themselves, pay TV and telecom companies have entered the market, looking to bundle home security and automation services with their video, broadband and telephony offerings. Their entrance is coincident with a period of elevated account attrition for the company, raising warning signs for investors and sending ADT's shares lower. New competitors, however, do not appear to be the culprit for ADT's higher attrition. Indeed, results for the last 12 months indicate that ADT has gained market share, while the modest gains made by pay TV and telecom companies have been at the expense of small, subscale firms. Instead, higher turnover in the housing market has led to greater account termination as subscribers change residences. ADT hopes to turn this challenge into an opportunity to both follow the old subscriber to their new address and sell service to the new occupant of the former premises. Furthermore, the company has taken steps to improve the long-term value of new subscribers, including tightening credit standards and optimizing its third-party dealer network by eliminating those not committed to following ADT's Pulse strategy. In the short run, these actions have a negative impact on attrition by reducing the number of new customers available to offset losses. However, we believe this will be more than offset by a greater lifetime value of the prospective subscriber base.
while i think about the competitive threat of telcom and cable, i also cringe at the idea of having another service tied to the same #$%$ provider i am already tied to because of long-term contracts. they have absolutely no incentive any longer to provide excellent service. i have found ADT service to be excellent.
I can believe that very easily. I'm not saying the telecom/cable/internet model for security is perfect by any means, but they have soooo much more resources in the field, and economies of scale that allow them to offer comparable product at a fraction of the cost.
This looks like part of a press release from Weitz Funds case FOR ADT. It addresses very few of the current issues facing the company, and takes more of a warm fuzzy global look at the industry. Its not a bad release by any means, but not very specific with regard to ADT's issues and what has brought the stock to its current levels.