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.
- Invensys limps along
- The Well curve (inverted bell curve)
- The Matrix reloaded
- Dick Morley Interview
- Spam revisited
- 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:
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).
- 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.
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.
UK FT (29 April 03) - Siemens 'can wait' for an Invensys bid
UK Independent (27 Apr. 03) - Invensys headache heads to Chicago
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
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
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.
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
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!
Matrix Reloaded - the next generation of virtual filmmaking
Matrix reloaded - official website
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,
Read the Dick Morley Interview
Visit Dick Morley at "The Barn"
Dick Morley's book : "Out of the Barn"
The Technology Machine -
How Manufacturing will work in the Year 2020.
By : Patricia Moody & Dick Morley.
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.
ZDNET has an excellent collection of articles
Internet Is Losing Ground in Battle Against Spam
My friend, Dr. Ted Mohns [firstname.lastname@example.org] 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.
Mike Marullo [email@example.com] wrote - NOT in defense of spam:
"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
"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."
"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.
Lawrence Gould [lsg@LSGould.com] wants Boeing to be 'gung-ho' on
other things than Wi-Fi:
"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!)"
"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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