The high potential Internet based security systems are building momentum. Napco invested heavily in R&D over the past several years to develop a family of innovative products. Those include remote video monitoring, remote control (turn on the lights, the heat, the television, whatever you want, with your phone), wireless break-in reporting (notify the police somebody is breaking in even if they cut the phone line, or you don't even have a land line), and a variety of other next generation systems. The company probably would not have made those moves, as logical as they were, if the C.E.O. didn't own more than 40% of the stock. The fact it did, Napco now is set to capitalize from the shift to digital technology.
Economic headwinds continue to prevent Napco from realizing its full potential. The base business, selling standard security systems to local dealers, is improving, though. The digital products are gaining acceptance. The Marks operation is turning the corner. And the giant cable companies continue to examine security as a prospective new revenue source, part of a "quadruple play." That hasn't happened yet. It's possible Napco will have to drive the new digital technology to consumers itself. Even if the industry takes that slower path Napco promises to deliver increasingly positive results in upcoming years. If the cable companies step in, explosive gains could materialize. Our estimates don't reflect the cable industry's potential, and are unchanged.
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