Security firms grapple with new attention

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By ROBERT TRIGAUX

© St. Petersburg Times,
published September 19, 2001

Monday's record 684-point plummet of the Dow badly bruised most stocks. But a lesser-known company with unusual expertise had a banner day.

On the first day of stock market trading since last week's massive terrorist attack, Monday's top gainer on the entire New York Stock Exchange, or NYSE, was a Florida company that happens to know more than its share about international mayhem, crime and security.

Shares of Jacksonville's Armor Holdings -- a maker of bullet-resistant vests, armored vehicles and a provider of security services in troubled spots around the globe -- rose 39.3 percent, or $5.62, to $19.92.

By NYSE standards, a heck of a gain on such a down day.

Nobody cheered at Armor Holdings under such painful circumstances.

"It is not a great feeling," Armor CEO Jonathan Spiller says. "It feels a bit ghoulish."

When it comes to picking winners and losers, the stock market is rarely sentimental.

With more than 5,000 lives presumed lost last Tuesday in terrorist attacks on the World Trade Center, the Pentagon and four commercial airplanes, Armor Holdings was among a handful of anti-terrorist companies that were the hottest of hot U.S. stocks.

Spiller says people want to feel safe right now. And investors are looking for businesses with the capabilities to offer that sense of safety.

That's why shares of InVision Technologies, a California company whose sophisticated explosives scanners may gain broader use at airports, soared 165.3 percent on the Nasdaq on Monday. That's why Massachusetts' Viisage Technology, whose software scanned Super Bowl fans in Tampa this year and compared their faces to a criminal database, saw its Nasdaq-traded shares rocket 142 percent.

The stock markets say Americans, unaccustomed to seeing actual military checkpoints (a term left over from John le Carre's Cold War spy novels) crop up in U.S. cities, are clamoring for more protection.

And for now, at least, if that means new restrictions on work and travel, so be it. Suddenly Big Brother's looking friendlier in a hostile world.

Armor started in 1969 as a modest provider of bullet-resistant vests to the law enforcement world. But in 1996, armed with new management and fresh capital, the company expanded rapidly with 20 acquisitions that spread the company across five continents and increased annual revenues to nearly $350-million.

Armor now provides security to some U.S. embassies overseas and certain U.S. airlines in such risky spots as Colombia. It also supplies the U.S. military with armor-plated Humvees and extra-bullet-resistant vests for special forces.

Spiller, who is British, say his company has been inundated with queries from money managers, Wall Street firms and analysts clamoring for more detail about the company. Exactly how Armor's skills can be used remains to be seen.

"People want to feel safe," Spiller says. "But does than mean more law enforcement? Using federal law enforcement officers to help airport security? Placing high-profile Americans in armored vehicles when they go overseas, or adding armed guards?"

The answer may be some combination of all these measures. A lot depends on how exactly the United States pursues the terrorists responsible for last Tuesday's attack.

And what terrorist groups may do in response.

Spiller, trained as an accountant, is low key and analytical. He is not hyping Armor Holdings' shares. He does realize that Armor's stock is up so sharply because investors expect the U.S. government and corporations to start spending a lot of money on extra security.

The Jacksonville executive grew up in England and grew accustomed to the nasty actions of Northern Irish terrorists. Neither Spiller's experience nor expertise prepared him for the magnitude of last Tuesday's violence in New York and Washington.

"Did I expect terrorism would find its way into the U.S.? Absolutely," he says. But the size of the attack? Its efficiency? They were "beyond conception."

Spiller spoke Tuesday as he was heading for Jacksonville's airport and a flight to Brazil. Getting people comfortable with flying again and back to work should be a top priority, he suggests.

"Right now, the public needs reassurance," he says and pauses. "We cannot afford any more incidents."

At Viisage Technology, president Tom Colatosti is kicking himself.

If only he had not retreated from the widespread criticism of the face-matching system used at Tampa's Super Bowl this year.

"I'm feeling guilty because if this technology were now deployed at airports, it could have made a real difference" against last week's terrorist attack, he argues.

Look at the photos of the terrorists the FBI has given to newspapers, he says. That's proof the FBI already had those faces in their database of terrorists.

"The FBI did not get those pictures from their families," he says. "It's likely we had some of those very faces in the database (supplied by federal, state and local law enforcement agencies) used at the Super Bowl."

A face-matching system could very well have picked those people out of airport lines at Boston's Logan Airport, Newark Airport or Washington's Dulles Airport.

"Explain to me how," Colatosti asks, "if I had a database of several thousand terrorists, and I briefly captured your image as you walked through a turnstile, and you were not one of those terrorists -- how this would harm your personal liberties?"

There used to be a simple answer or two to his question. They just don't sound as good now as they did before last Tuesday.

"I allowed myself to be intimidated by all the criticism," Colatosti says. "I wanted to be PC and sensitive when I should have been more aggressive."

Colatosti's second guessing won't be the last in the wake of Sept. 11, 2001.

- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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