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

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.”