UTC’s acquisition of GE Security has got some knowledgeable industry gurus thinking about the whys and where’s of where it all is going.

Here are thoughts from Sandra Jones, Principal - Sandra Jones and Company, and a founder of the headline-breaking Securing New Ground conference just held days ago in New York City.

“Since GE sold their homeland security business, the security business they sold to UTC has been like a third arm to GE and not a good fit with their health, energy and entertainment business. For UTC, it's just the right fit and core to their business.

“UTC's timing for this acquisition is perfect for three reasons:

• It fills some product and channel voids for UTC.
• It allows UTC to add more revenue and eliminate overhead as they consolidate the UTC fire and security business with that of the GE business.
• It uses their time wisely until the economy recovers.

“The old Edwards business was the crown jewel in GE's business.

It rounds out a void UTC had for providing a fully converged solution to businesses that understand the value of having an intelligent building and environment. It also gives UTC access to some of the best integrators in the market. While this is important for UTC's long term growth, the acquisition give UTC short term revenue and the ability cut expenses even farther.

“Ari Bousbib, who heads UTC’s overall business, pointed out in a recent presentation that they are already in the process of consolidating their fire and security offices to ‘move their operating margin from 9% to 15%.’ If, at the same time, the consolidation of all of GE Security's businesses, cuts even more redundancy and cost out of the business, it should get UTC to the 15% faster or increase profits even more.  

“The third reason is timing and, as many don't expect more of a recovery until later in 2010 rather than just waiting, UTC is utilizing the time wisely. They are taking positive steps to not only become more profitable but streamlining the business in order to become even better at providing converged solutions.

“One of the big challenges of convergence has been that, even though technology is enabling us to sell or use converged solutions, customers and supplier businesses are still in silos preventing them taking the full advantage of the benefits. 

“I think other suppliers should consider taking UTC’s lead. Even if not in a position to make an acquisition, they should use this slow down in the growth to organize their business to ensure they are part of the future.”

Zacks Equity Research chimes in with another point concerning GE: Its move to sell its fire alarms and security division comes as it is finalizing a bigger deal to hive off its NBC Universal television and movie unit into a joint venture controlled by the cable operator Comcast. Strategically, GE wants to raise funds to expand its core businesses which include infrastructure, oil and gas equipment, and energy - partly by hiving off peripheral divisions.