JimPinto.com - Connections for Growth & Success™
No. 118 : 30 April 2003


Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.

Contents:
  • Invensys limps along
  • The Well curve (inverted bell curve)
  • The Matrix reloaded
  • Dick Morley Interview
  • Spam revisited
  • eFeedback:
    • Depression prognostications
    • In defense of spam - not
    • Airlines - other things more important than Wi-Fi

Invensys limps along

At least for now, it appears that Invensys continues to limp along. The scare about a bigger-than-expected pension fund deficit did not raise its ugly head this week. The share price stabilized around 15p (15.75p at close of trading on Tuesday 29 April).

My analysis in the last eNews (April 20, 03) received a lot of kudos from insiders and outsides alike for being "spot on". One key London-based analyst who regularly follows Invensys commented:

    We broadly agree with your comments with some exceptions:
    • Your math for the bank-covenant situation is spot on. But, note that the £250m of EBIT was first-half loaded. Second-half EBIT was just £107m, so the current run rate is substantially below £250m. Depreciation is probably nearer £120m than £100m. But, even so, we consider it very likely that Invensys would have breached its covenants in the 12 months to September (the next time they are tested) if it did nothing.
    • We will be amazed if Invensys raises £2.2bn from disposals. Our own forecasts are for £1.15bn. We don't think that Baan will be sold for a positive number. Our guess is that Invensys will pay someone £100m to take Baan away.
    • The pension fund deficit is unlikely to be as high as £700m; it was about £150m last November.
There was some naive protesting on the Invensys weblog that Baan was worth something. That question will soon be answered. Jan Baan, the founder of Baan (who sold the company to Allen Yurko in 2000 for £470m) was rumored to be interested - but that was only a reporters conjecture. Chicago-based SSA Global Technologies may buy Baan - we'll soon see for how much (or how much Invensys will pay).

Most of the companies that are already part of the latest Invensys divestiture express hope that they will be bought quickly, and move to a company that will not be under the gun. They are anxious to focus more on products and customers, instead of short-term profit and cash flow (see weblog).

Understandably, many of the employees from companies that are supposedly NOT for sale - Foxboro, Wonderware, Eurotherm, APV - are also hoping that they will be sold, to gain an exit from the Haythornthweight regime. But curiously, the "loyal" VPs (reminiscent of Saddam's information minister) continue to proclaim that their companies are now part of the "new, strong" Invensys.

This week Heinrich von Pierer the CEO of Siemens said he wants to play a waiting game - waiting for further faltering before making a bid. As previously suggested, Siemens (also GE and Schneider) are likely interested primarily in process automation (Foxboro etc.) and rail signaling. These companies too will clearly be sold when Siemens (and the others) are ready.

Click UK FT (29 April 03) - Siemens 'can wait' for an Invensys bid

Click UK Independent (27 Apr. 03) - Invensys headache heads to Chicago

Click Invensys weblog

The Well Curve (inverted bell curve)

A century and a half ago mathematicians noticed that when large samples of different things were measured, results tended to cluster around an average. When plotted on a chart, the data took the shape of a bell. This "bell curve" defined normal statistical distribution and it became a fundamental law of natural science, a cornerstone of statistics.

Recently, several economic and social phenomena seem to be following a different pattern. Instead of being high in the center and low on the sides, this new distribution is "bi-modal", low in the center and high on the sides. So, it's called "the well curve". It seems to be popping up everywhere recently. There are lots of examples.

Organization size: For a variety of reasons, big companies are growing bigger (witness the number of mergers) and the number of small businesses is multiplying. But, there are fewer midsize companies.

Geopolitics: The past decade has seen the rise of huge multinational federations (NAFTA, the European Union, etc.) At the same time, small independent states and secessionist movements are also multiplying. And the mid-sized countries, like Italy and Spain, are losing population, power and status.

Consumer culture: Tiny screens (on cell-phones, PDAs and now wrist-PDAs) are multiplying, while large-screen TVs are also proliferating. Mid-sized seems to be going out of style.

Retail: Wal-Mart has become the largest company in the Fortune 500, and big retail-chains are expanding. At the same time, the number of small, specialty boutiques is soaring. But mid-sized companies are struggling.

Drooping middle class: The Federal Reserve Board's latest analysis of family finances shows that in the past decade, American incomes were up across the board. But when the population is divided into five equal segments, a well curve emerges - there was faster growth at the top and bottom, with less growth in the middle.

School Grades: In the last decade, the percentage of students scoring in the highest ranges increased, the percentage scoring at the bottom level increased, but the number with mid-scores dropped.

Purchasing patterns: The Wall Street Journal noted last year, "consumers are flocking to the most expensive products and the cheapest products, fleeing the middle ground."

Not everything measurable conforms to the well curve. But more and more things seem to be going bi-modal. The implications are huge: insurers, marketers, policy-makers and pollsters may be basing decisions on faulty premises about what is "normal". They are assuming "middle-America", "middlebrow" tastes. But, the importance seems to be shifting to the edges.

Theorists believe that conditions deviate from the bell curve only during periods of transition. The chaos of the new age, the realization of Alvin Toffler's "Future Shock", may be reflected by the inversion of all the old logic. The statisticians "standard deviation" may not be standard after all.

Click Read this significant Wired Magazine (May 2003) article
The Shape of Things to Come

The Matrix Reloaded

The wildly anticipated Matrix sequels are here! "The Matrix Reloaded" will open 15 May 2003 and "The Matrix Revolutions" will open 5 Nov. 2003. With a $300 million budget, the movies will feature amazing new visual effects wizardry and the most realistic computer-generated faces ever made.

Human beings recognize more than 10,000 complex facial expressions, most of them too subtle to be accurately simulated in standard computer-generated renderings. ESC Entertainment (Alameda, CA.) has spent the past three years designing digital images that precisely mimic the faces of stars Keanu Reeves, Carrie-Anne Moss and Hugo Weaving.

The results are impressive: In an epic fight scene, 100 clones of the trilogy's main villain, Agent Smith (Hugo Weaving) battle Matrix hero Neo (Keanu Reeves). Whose face is real is anyone's guess. It'll be interesting to see how many people realize that some faces in the movie are 100 percent computer generated.

To create photo-realistic digital copies of the actors' faces, ESC had to first invent an ultra precise facial mapping technique, dubbed "universal capture". Unlike standard motion capture techniques, in which a camera records facial movements by tracking painted-on dots, universal capture uses five Sony CineAlta high-definition digital cameras arrayed around a live, line-reading actor. The cameras zoom in and track minute facial imperfections, like pores or whiskers. The 3-D information then streams from the cameras (at about one gigabyte per second) into a proprietary suite of computer programs that extract the actors' facial expressions, stretch virtual skin and grow synthetic hair.

If you liked Matrix, get ready to be amazed - a different kind of shock and awe!

Click Matrix Reloaded - the next generation of virtual filmmaking

Click Matrix reloaded - official website

Click Imax Says Matrix Film Deal A 'Watershed Event'

Dick Morley interview

Under the auspices of the CONTEMPORARY CONTROLS newsletter, that inimitable interviewer and intrepid marketer Perry Marshall has done a super interview with Dick Morley.

With more than 20 US and foreign patents, Dick Morley is the quintessential engineer and inventor, the acknowledged "father of the programmable controller". He continues his work as a nationally recognized expert in novel computer design, artificial intelligence, chaos and complexity, and the factory of the future.

Dick lives in the wilds of New Hampshire with his wonderful and tolerant wife Shirley and their 30 children (3 their own). They still roam the back roads of several states on Dick's Harley Davidson. When he's working, at any time of the day or night, Dick is usually in his famous "Barn", the birthplace of many of his inventions.

Dick Morley is the author of three books and many articles and regular columns in major manufacturing journals. Get one of his books to read his innovative ideas and practical technology perspectives. You'll enjoy his humor-with-a-kick and make-you-think challenges.

There are two versions of the Dick Morley interview - 4 page abridged and 9 page uncut. Read the short-version to whet your appetite, and then I'm sure you'll continue with the complete unexpurgated, unabridged Morley.

Click Read the Dick Morley Interview

Click Visit Dick Morley at "The Barn"

Click Dick Morley's book : "Out of the Barn"

Click The Technology Machine -
How Manufacturing will work in the Year 2020.
By : Patricia Moody & Dick Morley.

Spam revisited

Our discussion about Spam, the scourge of email, brought a flurry of responses from all sides.

There are those who believe that the only way to eliminate spam is to allow emails ONLY from pre-registered senders. Indeed, several people who have signed up to receive JimPinto.com eNews have complained recently that they are not getting their eNews; it turns out that their own systems administrators have been blocking email.

In some cases, I received a return message, which said that eNews had bounced ("for policy reasons") - sometimes with a size limitation, sometimes because certain words were "suspect" or considered to be "porn". Indeed the word porn, as used here, is considered to be porn. (So some spam detectors may indeed bounce this eNews.) I was able to reported this to some people, and the problem was solved in 3 ways: a/ email from JimPinto.com registered as acceptable; b/ changed the system "filter" or loosened it up; or c/ simply gave up negotiating with the system-administrator and signed up for eNews with another private email address.

Most people do NOT agree simply to reject email from unregistered users, as Tom Barker had suggested in the last issue of eNews (feedback). Mike Marullo responds to that in the feedback section (below). And Ronald J. Vissing [RVissing@alltel.net] expressed it well when he wrote:

    "Regarding the suggestion that only e-mails from members of an address book be accepted: as a sales organization, we relish (legitimate) correspondence from new contacts. To stop receiving e-mail from non-registered users would be akin to having our business phone changed to UNLISTED."
The amount of spam has almost doubled from last year, threatening to cost businesses $10 billion in 2003. The best tech minds are working to help you perform one simple task - read you e-mail. You need to understand the alternatives and make a choice.

Click ZDNET has an excellent collection of articles

Click Internet Is Losing Ground in Battle Against Spam

eFeedback

My friend, Dr. Ted Mohns [tedmohns@yahoo.com] provided his opinion on the state of the US economy:
    "The risk of a deflationary recession is probably not large but is by no means negligible. GDP growth for the first quarter came in at 1.6% on an annualized basis. Unemployment figures continue to increase, and for the last two months workers' incomes have changed in a negative direction, adjusted for inflation.

    "Waves of home refinancing have in part propped up consumer spending as a key economic mainstay, but the risk of asset-deflation in the real estate sector isn't negligible either. Those investors worrying about a possible deflation will allocate a higher percentage of assets to cash, accelerating any deflationary trend.

    "Indices reflecting prices of consumer goods have recently declined. The services sector however continues to show price increases. New foreign equity investment in the US has plummeted over the past year, though foreign willingness to hold US debt has remained stable so far.

    "Federal budgetary and fiscal policies are consistent with a concerted effort to re-inflate, or to ward off deflation. M3 is up sharply over the past year or so. The Fed funds rate approximates the current core inflation rate. Federal spending and Federal indebtedness continue to increase.

    "No, the sky certainly isn't falling. At the same time, though, it appears that the only real remaining anti-deflationary weapon would be for Mr. Greenspan to start printing more money."

Mike Marullo [mam@oncfari.com] wrote - NOT in defense of spam:
    "To some, this may sound like a defense for spam (at first) so let me be very clear: I HATE spam! However, like it or not, the Internet is the new conduit of commerce and communication in the 21st century. Yes, itís flawed, impersonal and sometimes problematic, but it is pervasive and will continue to be even more ubiquitous in the future.

    "I agree that unsolicited email should be stopped, but not with the notion that stopping anyone with whom you are not already corresponding from sending you email is a panacea, as implied. That theory suggests that in our prior life (i.e., pre-Internet) we should have allowed the post office to deliver mail only from people with whom we were already corresponding and should have accepted information only from companies from which we already had a relationship. Okay, letís plot that curve from point zero; that is, assume that you have no prior correspondents or commerce partners. Thatís right; there is no curve to plot! In such a scenario, you would have to pro-actively solicit any and all correspondence AND know exactly where, and from whom, you want it to originate in advance. Good luck!

    "Subscribing to the "Donít let me see anything I didn't specifically ask for!" theory will definitely insulate you from unwanted, unsolicited garbage. But, one must also consider what else would be filtered out in the process. I, for one, am certainly not smart enough to know about everything I need to know about - in advance. For those who think they are, let me just say that there is a thin line between insulation and isolation; be careful what you wish for.

    "Perhaps a good compromise solution would be to have the server block any further unsolicited email once the recipient has sent an UNSUBSCRIBE message to that sender. (Nothing ticks me off more than to have my UNSUBSCRIBE message used as an email verification and validation method for future spamming!)"

Lawrence Gould [lsg@LSGould.com] wants Boeing to be 'gung-ho' on other things than Wi-Fi:
    "Gee, I wish Boeing was as gung-ho about retrofitting and outfitting its planes with heavier, impregnable cockpit doors and cockpit door locks since the first airline hijacking back in the late 60s on up to about two years ago. But I guess coming up with ideas in the pursuit of profit is more important than people's safety and security. Is that a cheap shot? Monday morning quarter backing? No, it is not.

    "It is unconscionable that all the aircraft manufacturers, airline companies, airline security consultants, the FAA, the law enforcement agencies around the world, America's "intelligence" agencies, and the 100 members of Senate and 435 members of the House of Representatives, plus all their minions, couldn't figure out in the course of 35 years that airline cockpits should essentially be "lockboxes."

    "And now after a "crash" course on firing, securing, retaining, and maintaining guns, pilots can bring guns onto planes. That begs two questions: Who flies the planes while pilots play John Wayne? And, how secure are the lockboxes containing those guns?

    "Well at least passengers will be able to reach out and touch someone, if only through Wi-Fi."

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