Television advertising by competitors ADT and Comcast is taking off. Napco serves the independent dealer market, which competes with the giants. Independent dealers currently serve approximately 70% of the security system market. Penetration is especially robust in the commercial building segment. Dealers also do well with residential customers who want a specialized system. The giants probably will capture a larger percentage of the market as the cable companies bundle security with their other offerings, to make it a "Quadruple Play." That will just expand the market, though. Napco is well positioned to win a sizable portion of the dealer segment as digital security goes mainstream.
We have lowered our fiscal 2013 (June) estimates due to the hurricane's impact. But we think business will return to normal before long. An eye popping increase in sales and earnings could develop over the coming 2-3 years.
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