SecProbe.io

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Mail Stop 3561

      November 2, 2005

James E. Minarik
President and Chief Executive Officer
Directed Electronics, Inc.
1 Viper Way
Vista, California 92081

	Re: 	Directed Electronics, Inc.
Amendment No. 1 to Registration Statement on Form S-1
      Filed October 17, 2005
		File No. 333-127823

Dear Mr. Minarik:

      We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.  After
reviewing this information, we may raise additional comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Summary, page 1
1. We note your response to comment 1 of our comment letter dated
September 22, 2005.  We reissue the comment as it applies to the
sections entitled "Our Competitive Strengths" and "Our Strategy."
This information is more appropriately discussed in the complete
business section.  Please revise.

Our Business, page 1
2. We note your response to comment 4 of our letter dated
September
22, 2005; however, we note that you continue to state that you
"have
increased revenue consistently every year for the last 15 years."
Please revise to omit or balance this disclosure with net income
trends for the past 15 years.
3. We note the information you provided in response to comment 5
of
our letter dated September 22, 2005.  It is unclear how the
information you provided supports your statement referenced in the
first bullet point that you are the "largest designer and marketer
of
consumer branded vehicle security and convenience systems."
Please
revise or provide additional support.
4. We note your response to comment 5 of our letter dated
September
22, 2005.  We note that the information you provide indicates that
James E. Minarik is a member of the Board of Industry Leaders for
the
Consumer Electronics Association and a governor in the Electronic
Industries Alliance.  However, it is unclear how this information
supports the statement that James E. Minarik is widely recognized
for
his industry leadership.  Please omit the statement, or revise to
describe his positions in the CEA and EIA.
5. We note your response to comment 6 of our letter dated
September
22, 2005.  We reissue that part of our comment asking you to
disclose
in the prospectus how you are a "leader" or the "largest designer
and
marketer." For example, it appears that you are measuring
leadership
in terms of market share and sales revenue and that you are
relying
on the report by Bobit Business Media.  Please also tell us
whether
this Bobit report was prepared specifically for you.  If so, tell
why
you have not named the preparer as an expert and included a
consent
pursuant to Rule 436.  In addition, we note that you have obtained
a
consent from Consumer Electronics Association.  Please tell us why
you have not filed this consent and named Consumer Electronics
Association as an expert.

Risk Factors, page 3
6. Please note that the meaning of terms in the summary must be
clear
from their context.  Please revise to disclose the risks that you
are
referring to, rather than cross-referencing to the risk factors
section.

Industry, page 48
7. We note that you provided crime data in connection with your
statement that "[i]n 2003, content theft from vehicles amounted to
approximately $1.6 billion in the United States;" however, we were
unable to locate support for this statement in Exhibit F.  Please
revise or advise us.

Executive Compensation, page 71
8. We note your response to comment 20 of our letter dated
September
22, 2005.  Please revise to include the 2005 compensation in the
table, rather than in a footnote.

Certain Relationships and Related Party Transactions, page 76
9. We note your responses to comments 28 and 41 of our letter
dated
September 22, 2005 and that employees purchased the convertible
promissory notes.  Please tell us whether any current or former
members of management were among these purchasers, and if so,
describe these transactions in the prospectus.

Sale Bonus Agreements, page 76
10. We note your response to comment 21 of our letter dated
September
22, 2005.  Please quantify the cash and stock that each named
executive will receive.  In addition, we note that you have only
filed the sale bonus agreement for Mr. Minarik.  Please file each
of
the sale bonus agreements that were entered into with related
parties.

Associate Equity Gain Program, page 76
11. We note that you have revised your disclosure regarding the
associate equity gain program.  Previously, you disclosed that
executive officers were included in the associate equity gain
program
and that executives would be paid a separate termination fee in
connection with this program.  In your current disclosure, you
state
that none of your executives are participants.  Please explain
this
discrepancy and revise your disclosure to describe the associate
equity gain program before and after this offering and any
termination payments on an individual basis.

Principal and Selling Stockholders, page 78
12. We note your responses to comments 23 and 24 of our letter
dated
September 22, 2005.  Please disclose that none of the selling
stockholders are broker-dealers, as indicated in your response.
Please also revise footnote (4) to disclose the affiliation with a
broker-dealer and name the registered broker-dealer.

Description of Capital Stock, page 80

Common Stock, page 80
13. We note your response to comment 25 of our letter dated
September
22, 2005.  We note that holders of Class A and B common stock were
entitled to dividends.  Please tell us whether you intend to pay
any
dividends in connection with the conversion or in connection with
this offering.

Note 1. The Company and Business Activities, page F-7
14. We have reviewed your response to comment 33 of our letter
dated
September 22, 2005.  Please explain why you subtracted net income
attributable to participating security holders from net income in
applying the if-converted method to calculate basic earnings per
share.  Ensure your response is clear in terms of what "net income
attributable to participating security holders" represents.  See
paragraphs 26 and 61 of SFAS 128.  Also, please revise your
disclosures in note 4 to clarify that both outstanding warrants
and
employee-owned shares subject to repurchase rights are treated as
outstanding shares of common stock for purposes of basic earnings
per
share because the holders of these instruments participate in
earnings with common shareholders.

Note 3.  Summary of Significant Accounting Policies, page F-11

Business Segment Disclosures, page F-15
15. We have reviewed your response to comment 35 of our letter
dated
September 22, 2005.  Please tell us in more detail how you
determined
that the security and entertainment and satellite radio areas of
your
business do not represent separate operating segments under
paragraph
10 of SFAS 131.  In this regard, based on your disclosures on page
31
of the Form S-1, it appears that discrete financial information is
tracked for each of these areas, at least down to the operating
margin level.  Since such discrete financial information is
available, we presume it is used by your chief operating decision
maker to assess performance and make decisions about resource
allocations.  If you believe there are specific facts and
circumstances which would overcome this presumption, please advise
us
in detail as to the basis for your position.  In responding to our
comment, it would be helpful if you provide us a copy of your most
recent monthly financial review packages provided to the chief
operating decision maker as well as the board of directors.
Please also tell us more about why you believe your presentation
of
only one reportable segment is consistent with the objectives set
forth in paragraph 3 of SFAS 131.  In this regard, we understand
based on your disclosures throughout MD&A that sales of satellite
radio related products and services are growing more significantly
than sales of security and entertainment products.  We also
understand that sales of satellite related products generate
comparatively lower gross margins than your historical security
and
entertainment sales.  Because satellite radio sales appear to be a
growth engine of your business, we believe it would be beneficial
if
readers were informed of the extent to which your gross and
operating
margins differ between your security and entertainment sales and
your
satellite radio sales.
16. We have reviewed your response to comment 36 of our letter
dated
September 22, 2005 and we believe that you should disclose gross
sales information for each of your five main product groups,
pursuant
to paragraph 37 of SFAS 131.  We do not believe the
impracticability
of providing net sales information by product group means that you
should not report gross revenues from external customers for each
product group.  We also find your footnote disclosure of gross
sales
of satellite radio products and security and entertainment
products
to be inconsistent with your response to our comment where you
indicate that you will disclose net sales information for these
two
product groups.  Please explain this apparent inconsistency.

Note 12.  Notes Payable to Shareholders, page F-25
17. Regarding your accounting for convertible instruments issued
as
paid-in-kind (PIK) interest, where the original convertible
instrument to which the PIK issuance relates was issued before the
effective date of EITF 00-27, please tell us in more detail how
you
determined that the commitment date of the original convertible
instrument was also the commitment date for the additional
convertible instruments that would potentially be issued as PIK
interest in future periods.  Refer to the definition of commitment
date in footnote 1 to EITF 98-5, which indicates that the
commitment
date is the date when the investor has committed to purchase the
convertible securities.  It does not appear to us that on the
commitment date of the original convertible instrument, the
investor
was also committed to accept interest payments in additional
convertible instruments.  Rather, the investor retained the right
to
decide, in future periods, whether to elect payment in cash or in
additional convertible securities.  Thus, it would appear that
under
the guidance in EITF 98-5 and Issue 10 of EITF 00-27 alike, the
commitment date for the convertible instruments issued as PIK
interest would be later than the commitment date of the original
convertible instrument to which the PIK issuance relates.  If,
after
reevaluating the guidance, you now believe a revision to your
financial statements is required, please advise.

Note 13. Shareholders` Equity, page F-25
18. We have reviewed your response to comment 41 of our letter
dated
September 22, 2005.  Please provide additional clarification
regarding the basis in GAAP for your accounting.  In doing so,
please
describe in more detail the material terms of the repurchase
features
of both the Class A shares and convertible promissory notes sold
to
employees.  Please be clear in terms of whether each of the
repurchase rights represents a call option of the company, a put
option of the employee, or both.  Also, clarify whether each of
the
respective repurchase features represents an active right of the
holder, or whether the repurchase feature is contingent on some
event.  Describe in more detail the specifics of the transactions,
such as the transaction dates and issuance proceeds for both the
stock and convertible debt sales to employees.  Also help us
understand the business reasons for including the repurchase
features
in these instruments.

Additionally, please revise your explanation of the basis in GAAP
for
your accounting to tell us why you believe each of the pieces of
authoritative guidance you reference are applicable in light of
the
nature and terms of the repurchase rights/obligations.  Also,
clarify
how you applied the applicable literature.  For example, in
subsection B. of your response, you indicate that you considered
and
applied the guidance in paragraphs 71(b) and 74 of FIN 44 and
Issue
23(d) of EITF 00-23.  However, it is unclear how you determined
that
your employees made a substantial investment as described in
paragraph 74 of FIN 44, given that the call price on the grant
date
would be equal to the consideration paid by the employees plus 8%
interest.  If no interest premium would be applicable upon
repurchase
at the grant date, your response should be clear in this regard.
It
is likewise unclear how you have applied Issue 23(d) of EITF 00-
23,
as you have provided no discussion regarding the applicability of
this issue to your facts and circumstances.  Additionally, in
subsection C. of your response, you indicate that you considered
and
applied the guidance in Issue 33(a) of EITF 00-23.  Please explain
to
us in more detail how Issue 33(a) of EITF 00-23 applies to your
facts
and circumstances, as this is not clear from your current
response.
In this regard, it appears that Issue 33(a) applies to situations
where the call provision is effectively a forfeiture provision
because the employer can buy back the shares at the end of the
original vesting period of the award, and pay no more than the
price
the employee paid.  Whereas in this case, the securities at issue
are
vested upon issuance and the strike price for the call option is
the
lower of fair value or the original purchase price plus 8%
interest.
If you believe this issue is somehow applicable by analogy, please
tell us in more detail how you arrived at this conclusion.  Also,
explain why you believe that application of Issue 33(a) would
result
in your recording no compensation expense until the IPO date,
rather
than recording compensation expense prior to the IPO date based on
an
assumption of the number of shares to be forfeited, and then
truing
up this compensation expense upon IPO.

Unaudited Pro Forma Financial Data, page P-1

Note (a), page P-2
19. We reviewed your response to comment 47 of our letter dated
September 22, 2005.  As previously requested, please tell us in
detail and disclose why, in calculating pro forma interest
expense,
you use interest rates in effect at the time of the transaction
rather than current interest rates.  Also, disclose the
anticipated
effects of the current interest rate environment in the
introduction
to the pro forma financial statements.  Additionally, please
clarify
the apparent inconsistency between the statement in your response
letter that your current interest rates are based upon the LIBOR
rate
at the time of the transaction plus the applicable interest rate
spread, and your disclosure in Note 11, where you state that your
current interest rate equals the current LIBOR rate plus the
applicable interest rate spread.

*****

      As appropriate, please amend your registration statement in
response to these comments.  You may wish to provide us with
marked
copies of the amendment to expedite our review.  Please furnish a
letter with your amendment that keys your responses to our
comments
and provides any requested information.  Detailed letters greatly
facilitate our review.  Please understand that we may have
additional
comments after reviewing