Niles, Elan, Xantech Grouped: What’s Next?

By Joseph Palenchar On Apr 19 2010 - 4:01am




CARLSBAD, CALIF. — Nortekowned Linear placed three of its residential- installation subsidiaries into a single group to increase collaboration and efficiencies, but the companies won’t go so far as merging sales operations, executives said.

The as-yet-unnamed new audio, video and control group consists of Niles Audio, Xantech and Elan Home Systems, including the Elan-marketed Aton, Sunfire and HomeLogic brands. Linear-owned brands not part of the new group include Gefen, Imerge, Omnimount, Panamax, SpeakerCraft and others.

“The companies will not merge, and they will still have a great deal of autonomy and differentiation,” Linear chairman Grant Rummell told TWICE. Said Elan president/chief technology offi cer Bob Farinelli, “We aren’t going to have the same sales team sell all three companies’ products. We have different customers, and it’s a high-touch business.”

The new business unit, based here, is led by president Mark Terry, a 17- year Harman International veteran who most recently was president of the Harman Pro Group. Reporting to Terry are Elan president/chief technology officer Bob Farinelli, Niles Audio president Frank Sterns and Xantech president Graham Hallett. Terry “comes to Linear with a proven track record of integrating business units without sacrificing brand autonomy,” a Linear statement said.

Terry, nonetheless, will have “a great deal of freedom” to implement ways to “improve collaboration and cooperation among the companies,” Rummell said of the new group president, who is traveling outside the country. Such efficiencies could include more shared warehousing, collaborating on new-technology development, and coordinating trade-show exhibits so that each company accentuates a different area of expertise, but those decisions will be up to Terry, he said.

“When we bought companies, they tended to operate relatively independently,” Rummell said of Linear’s acquisitions of these and other companies. “That was the way we were making acquisitions at the time, and they were very different times. We tended to let them operate relatively independently, although there have always been some areas of combination.”

In the housing market’s current state, Linear needs to further increase collaboration among the three companies, he said, and that can’t be accomplished without the hiring of “one person who is focused on making the companies more successful than in the past.”

Although Linear “is not unhappy” with the three companies’ financials, “there is an opportunity to do better,” he said. Other Linear companies, such as SpeakerCraft and Gefen, “are doing a really good job, and there’s no reason [to include them in the new group] for the sake of doing it.”

In a written statement, Terry said he foresees “benefits that will inevitably come from greater collaboration between the brands.” Each company, he said, “has a legacy of innovation and excellence that can be further strengthened by sharing resources, information, and ideas.” The end result will be “a larger portfolio of clearly defi ned, integrated and networked-based product offerings that bring meaningful innovation and value to our whole house automation, lighting, security and HVAC control customers.”

Last December, Linear parent Nortek emerged from a prepackaged Chapter 11 bankruptcy. Nortek, through its various subsidiaries, is a global manufacturer of branded residential and commercial ventilation, HVAC, and home-technology convenience and security products.

For his part, Elan’s Farinelli said the three companies engaged in “loose cooperation” over the years and stepped up cooperation with the launch of the lowcost Digi5 multi-room-audio platform, implemented by Xantech, Elan’s Aton brand and Linear. “That was a good example of us working together. We took a back-end technology common to all three but added a differentiated user interface.” That, he said, “is an example of the future.”

Collaboration will only grow, he continued, now that “there’s one guy who can make the call.” The appointment of Terry “changed the whole dynamic,” he said.

For his part, Xantech’s Hallett said he welcomed the development. “No one needs to be reminded that we are still in an unprecedentedly tough market,” he said. “Anything that can help us achieve economies and efficiencies of scale is something we very much need.”

Terry, he continued, “comes in with new perspectives but at the same time with a proven track record in making a high-profi le, multi-brand audio electronics corporate structure more agile and competitive while preserving the integrity and value of those brands.”

For his part, SpeakerCraft CEO Jeremy Burkhardt told employees in an email that SpeakerCraft is “totally healthy and profitable” and that Linear’s Rummell “has recognized this fact and has guaranteed that we will continue to operate autonomously.” Burkhardt also said he is “confi dent our most recent efforts in both product development and business strategy have placed us in a very positive position in the marketplace. As we move through the rest of this year and into the future, I expect business to continue improving and our efforts will be rewarded with increased sales and a greater share of the market.”

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