JimPinto.com - Connections for Growth & Success
No. 55 : August 5, 2001
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
- Invensys: Yurko's retreat - Depends on what IS is
- Invensys - for sale
- Honeywell - re-org after GE
- Market for MEMS - cell phones
- Printable batteries
- The meaning of silence
- Marketing in industrial companies
- Definition : "knacker's yard"
Invensys : Yurko's definition of what IS is
Apparently, Allen Yurko's full-scale retreat from the bloody corporate
battlefield was summed up perfectly at last Wednesday's annual meeting,
when he marched onto the podium to the strains of Tchaikovsky's 1812
Overture. (The piece was written to commemorate the disastrous retreat of
Napoleon's bedraggled and downtrodden army from Moscow.)
In an interview with the UK Sunday Telegraph, a still unrepentant Allen
Yurko brazened it out. He kept defending his strategy - merging with BTR
and buying BAAN - with an arrogance reminiscent of the Clintonesque
"depends on your definition of what IS is".
Yurko on the merger with BTR : "The BTR deal was the smartest thing I have
ever done." (Hmmm... that's not very smart.))
Recognizing how important BAAN was, perhaps "it should have reported
directly to me."
(That is an unfair slap to Bruce Henderson and others, who
ran it admirably well, given the circumstances. Perhaps if Yurko had run it
himself, it would not be in its present recovery mode...)
Yurko: "I do not accept that I have ever changed strategy."
(Hmmm... in a fast-changing environment, that's a stupid statement.)
Yurko keeps falling back on his biggest excuse - that the US industrial
economy is bleak - ignoring that fact that he had kept pushing his managers
mercilessly for profits and cash-flow, which was a short-sighted palliative
and would merely heighten their plight.
Yurko : "My mistake was believing things were going to get better way too
soon, but that was my guidance."
(Hmmm... who exactly was giving him
guidance? People who worked with him report : "He'd never listen!")
Yurko summarizes: "I do not expect sympathy. I am not expecting people to
give me high marks. I do not want the tone of this to be that I am feeling
bashed. I am a big boy. I wanted to do the right thing and am not asking
for special consideration."
(Hmmmm... Who is offering sympathy? Who is
giving him high marks? His pension of $500k/year or $7.5m immediate
cash-out was "special consideration" indeed.)
One senior cohort reported: "Allen seemed sad, during a lunch last week". I
must admit I couldn't stop laughing.
Read for yourself : Telegraph Interview with Allen Yurko
Invensys for sale
The UK Observer reported on Sunday (29 July '01) that Invensys "is putting
itself up for sale". The newspaper quoted senior company sources as saying
the board was interested in attracting bidders. "If there is a sensible
offer made for Invensys or any part of it, we would definitely consider
that very seriously."
The unofficial price tag was set at 8-9 billion pounds - compared with
market-cap of 2.9 billion pounds (on Friday 3 August '01, the stock closed
at about 82p, compared with 400p when this mess started). Underlying
message : Invensys is for sale - make an offer.
One Invensys employee from Australia wrote this : "I hear that INVENSYS can
be bought for 8-9 billion pounds. I wonder how much they expect to get for me?"
Financial Times Market-watch - Invensys keen to sell up
The new CEO, Rick Haythornthwaite (45) will be paid about $1m per year (a
cut from Yurko's salary of $1.2m). No one knows yet what Haythornthwaite's
incentives are, for saving (or selling off) Invensys. His biggest claim to
fame is that he sold a cement company to its major competitor.
The new million-$ man, wrote this to his new employees (extracts from his memo):
"I took this job because I am convinced that there are fundamental
strengths in the Group and its people which are just waiting to be
released. My first impression is that Invensys is a good company, with the
potential to be an even better one. We have a strong base on which to
build: strong market positions, advanced technologies and good
relationships with our customers."
Hmmm... Haythornthwaite seems to be rehearsing his pitch to possible buyers.
"My first priorities will be to stabilize the business, build confidence in
Invensys' future with the financial community and develop my understanding
of the Group as rapidly as possible."
Hmmm... It will be interesting to read Haythornthwaite's words when he
announces to the same employees that they've been sold off.
Invensys Chiefs come under fire
I had ONE nameless email feedback - "Give the Yurko and Invensys bashing a
rest. Every major industrial controls company is suffering from poor
sales." When I asked the person for a name (which I would have kept
confidential, in any case), there was an ominous silence.
In the meantime, I have received a lotttt of appreciation, especially from
employees: "Pleeeease continue - we get very little feedback internally;
everyone is paranoid about what is going on."
All things considered, I'll continue to provide a summary of new-news,
sprinkled with some of my own prognostications.
Read the whole background & story The Invensys decline
Honeywell re-organizes after GE exit
If the GE deal had been approved, GE was going to break Honeywell
Industrial Automation &Controls (IAC) into 3 different parts 1) Systems, 2)
Products, 3) Services. After John Weber had gone (deposed IAC chief,
fall-guy for Bonsignore) Ron Sieck of Sensors & Controls (S&C, former
Honeywell Microswitch core, based in Freeport, IL - near Chicago) was given the top IAC job on
an interim basis, pending the GE merger.
Now that the merger is off, chief Larry Bossidy has initiated a re-org,
with a public statement that "red vs. blue" attitudes will not be
tolerated. Bossidy seems to be bringing in ex-Blue (AlliedSignal) folks for
most of his top jobs. He has a one year contract and wants a team he can
Kevin Gilligan, who was running Honeywell Home & Building Controls, is now
running all of the "old red Honeywell" (with the exception of the aerospace
stuff). This is now the combined "ACS" (Automation and Control Solutions)
which now includes IAC, which itself had included S&C.
Gilligan is NOT highly admired, even among his own troops. He has done
nothing substantial with either products or systems for years. He is
keeping his Home & Building Controls leaders and bringing in some new blood
to head up the projects pieces. Combination of the service businesses makes
sense, as there is lots of synergy there and should have been done long
Insiders report that, with all the changes and uncertainty, everyone is
still "a little jerky".
The Honeywell prize (which both GE and United Technologies wanted) was
Avionics, which is now run independently and Bossidy will sell it
No one really wants the rest. Honeywell IAC (like Foxboro at Invensys) may
be better off consolidated with Siemens, Schneider or Emerson. Investment
has languished and these companies will need a lot of new developments and
leadership to thrive again. In both cases, the problem is that the
financials have been fiddled, making a lot of write-offs likely.
Cash coverage is unhealthy and that means, as separate businesses, they'll
have to sell assets for liquidity. This makes purchase by independent
asset-sellers the most likely scenario. In spite of Bossidy's one-year
timeframe (similar to Haythornthwaite's at Invensys) both companies will be
accepting offers from all reasonable buyers for any or all of the pieces.
The next few months will be interesting.
GE, Tyco, Emerson and others are certainly "looking" at both Honeywell and
Invensys. My own opinion is that they will wait for the pieces they want
to be available separately.
Let me give my friends at Foxboro, Honeywell IAC, Eurotherm and others some
comfort: the strength of your companies is in your middle management and
installed base. Whoever acquires it will be looking for the key ingredients
that make a difference - YOU, the management that can help make your
company a success.
The complete Honeywell Saga
Cell-phones - big market for MEMS
Five years ago, the average cell phone contained about 500 individual
components. Now, the number had shrunk to about 100. Integrated components
cost less to produce, making a single product with integrated subsystems
cheaper. Integrated components are smaller, save wiring and board space,
and reduce assembly cost. Fewer components mean fewer reliability problems.
When new third-generation (3G) cell phones arrive, the desire for
multi-band, multi-protocol phones, with features such as GPS, inertial
sensors and biometric authentication will add a lot of new components - and
users will expect the form-factor (size, shape, battery-life, etc.) to
remain unchanged. But, some of the additional components are not small and
flat, so integration becomes difficult.
This is where microelectromechanical systems (MEMS) comes into play -
relays, tunable capacitors, inductors, filters, microphones, reconfigurable
antennas, local oscillators, resonators, switches, and programmable phase
shifters. MEMS shrink the components to be compatible with standard
semiconductor processes. This lowers cost, reduces board space and
power-use. So, cell-phones become the next big market for MEMS.
MEMS revolutionize handset components
Excellent MEMS website: Dynamic Silicon,
A new type of low-power battery that does not require a case and is thin
enough to be printed on paper will soon be commonly available.
The battery relies on a mixture of chemicals to produce 20 milliamp-hours
at a voltage of 1.5 volts for every square centimeter that is printed. The
battery material is about 0.5 mm thick and would, if mass-produced, cost
just a few cents per square inch. It consists of three different layers -
conventional zinc manganese-dioxide components as anode and cathode and
sandwiched in between, the cell's chemical power source - which remains a
closely guarded secret.
The developer, Power Paper from Israel, claims the material is non-toxic
and non-corrosive, making the battery safe to use without any casing.
New Scientist Printable Battery
Power Paper website
In the most recent eNews, I wrote:
"The strategic marketing people at some
of the troubled companies have been strangely silent. It's almost like a
radar - one can actually sniff out stupidity by the lack of noise..... "
Jake Brodsky [jBrodsk@wsscwater.com] responded:
"This is strangely similar to how US Navy used to track the newest
generation of Soviet submarines: find a body of water where the noise
they'd expect wasn't there. The Soviets made no masking noises, probably
figuring that it's better not to make any noise than to deliberately make
noise and remove all doubt.
"Of course, if you DO make marketing noises, it better look just like
real marketing or the BS detectors will start going off and you'll look
even more stupid."
An experienced industrial automation marketing person sent this:
"I have worked for 27 years in marketing and strategic marketing positions
at Foxboro, Texas Instruments, Siemens, Elsag Bailey and ABB. The
"strangely silent" marketing people are kept quiet because of the current
wave of management. At the risk of over-generalizing, the 1970's saw a
wave of sales types at the top; the 1980's saw a wave of operations types
at the top; the 1990's saw a wave of finance/accounting types at the top.
The current wave is a mix of operations types.
"The theory is that a company will find their sweet spot, shift to another
through strategic acquisitions etc., and have enough discipline in sales,
R&D, operations and sales to implement the strategy."
Don Caffee [firstname.lastname@example.org] was curious about the Times UK mention of
Invensys being sold off at "knacker's yard" prices. He sent this:
"I asked some of my friends in the UK what the term "knackers" meant. In
case you don't know, he says "knackers" is an old English word meaning
"Knackers Yard" - a place where old horses are put down when they are past
their useful life. His remark: Not a bad description, eh!"
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