Backed by ad campaign, ADT sees end to customer losses

By Lewis Krauskopf (Reuters) - ADT Corp Chief Executive Officer Naren Gursahaney expects the home security company to increase its subscriber base in North America this fiscal year, excluding acquisitions, for the first time since it was spun off from Tyco International Plc more than two years ago. "We have been in a net customer loss position through last year," Gursahaney told Reuters in an interview. "We are closing that gap, and we expect this year to be able to turn the tide there." Gursahaney outlined other steps he will take to protect ADT's 25 percent share of the professionally monitored home security market, including launching a new television and digital advertising campaign on Monday. ADT is under pressure from telecommunication companies such as AT&T Inc seeking to make inroads into home security and do-it-yourself products that allow homeowners to install their own monitoring. "It’s not just defend, but defend and grow," Gursahaney said. "I’m not happy with only 25 percent market share." ADT has plenty of skeptics. About 23 percent of its shares outstanding are held as short positions, according to Thomson Reuters data, meaning a huge number of shareholders are betting the stock will fall as ADT loses ground to internet-enabled rivals. The skepticism seems to reflect "more of the cloud of what could happen," Gursahaney said. "The only way we address the shorts is by continuing to execute every single day, every month, every quarter," he added. ADT has nearly 7 million North American customers. In an effort to add to that base, the company's new television and digital advertising campaign will feature actor Ving Rhames - known for roles movies such as "Mission Impossible" and "Pulp Fiction" - as a spokesman. One commercial touts ADT's connected home features that go along with its security monitoring, as Rhames asks: "What good is a smart home if it's not a safe home?" While the company's past advertising emphasized the need for security, the new campaign is seeking to separate ADT from its competitors. "We never had to do that in the past because we were the clear leader and the most well-known brand," Gursahaney said. "Now that we do have other brands coming into that, we do need to clarify why we’re different." ADT has its own higher-end product with smart home features, known as Pulse, which more than half of new customers are selecting, and which is the primary product featured in the ad campaign. Pulse currently represents less than 20 percent of ADT's total customer base. Gursahaney wants to boost that to at least 50 percent over a "multi-year" period, noting Pulse's retention rates are "better than our traditional security customers." ADT's new ads come as telecom companies reduce advertising spending on their security products, according to a Morningstar report last month. The threat remains, however. Telecommunication companies are taking more than 20 percent of new subscribers in the professionally monitored security market, according to market research firm Parks Associates. More broadly, 25 percent of all security systems installed in the last year were self-installed. (Reporting by Lewis Krauskopf. Editing by Andre Grenon)