JimPinto.com - Connections for Growth & Success
No. 71 : December 15, 2001
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
- Industrial Automation Stew Brews
- Siemens, ABB, Invensys, Rockwell
- Arthur C. Clarke: predictions for the 21st Century
- More on Dean Kamen's Segway HT
- David Gerlerntner - the next computer interface
- Technology Toys: Holiday Buying Guide
- It's nice to be 64 - poetic response
- Comments on Kamen's Segway HT
- American media in the slums of Brazil
Industrial Automation Stew Brews
Several industrial automation companies are going through serious problems
at this time. To explain their plight, the ones in trouble point to a
worldwide decline. But, that is not the case; indeed, some of the majors
are doing well.
Emerson is a good example, proving that sensible strategic planning and
good management provides good results. A senior Emerson insider reported:
"Emerson just finished a year where we had record profits, record sales and
record bookings. Bookings up in double digits and still going! Our
analysis is that the industry as a whole shrunk globally over this period."
Siemens stumbles - but Automation is doing OK
The Germany based industrial giant was profitable for fiscal year 001, but still far
from its previous-year results. While total sales were up 12%, to $ 78b,
net income for the year ($ 1.8b) was off more than 70% from FY 2000 ($ 7b).
Poor results for 2001 included $970M loss in Q4 - a loss of about $537
million in the US alone. But, much of the loss comes from Telecomm,
including one-time charges, as well as losses posted by semiconductor
subsidiary Infineon (which is being "de-consolidated").
The automation segment (global size about $800m) seems healthy. So, Siemens is
well positioned to buy Rockwell (if that can be slid past anti-trust), or
Honeywell IAC, and/or large segments of ailing Invensys.
Siemens lays out recovery plans for 2002
ABB blahs get bigger
Percy Barnevik is respected for having brought ASEA and Brown Boveri
together in '87-'88 and then nearly doubling the combined business of the
two, with share price rising over 20% per year during his eight years as
CEO. However, since he moved to Chairman in '97 and gave up the CEO role,
ABB has been on a downward slide.
Over the past 18 months, ABB shares collapsed more than 80% and debt
climbed sharply (now $11.7 billion), increasing $4.3 billion in the past
three quarters alone. This caused Barnevik to go from near-hero status to
being viewed as the ABB destroyer; now he has quit and his company is
really in a mess.
ABB has deep-rooted problems. (See ABB blahs - JimPinto.com eNews Feb. 21,
2001). With its earlier acquisition of Combustion Engineering, ABB has
90,000 asbestos-related lawsuits pending in the U.S. The new CEO, Jorgen
Centermann, is trying to fix major structural and organizational issues,
which is likely to take 3-4 years. There is a lack of new products in the
pipeline. While projected cost savings may materialize, revenue growth is
likely to be disappointing.
More and more people will be trimmed, but that does not improve the ABB
chances to survive. Look for swift amputation of diseased limbs and ugly
tails and expect more write offs. The organization chart is bizarre, with a
multi-dimensional reporting structure and consequent lack of crisp
responsibility. Meanwhile several good managers, salesmen and engineers are
exiting ABB like rats off a sinking ship....
Jurgen Dormann succeeds Percy Barnevik as Chairman of ABB
Invensys cutbacks continue - while brokers are busy
An industry analyst who recently met the new Invensys CEO, reported:
"Overall I was impressed. Haythornthwaite tells a credible story of
previous bad management, no focus on cash flow, poor morale and widespread
underperformance. He has now set up 9 market-focused groups, tasked with
working out a future strategy. Only 2 businesses are officially for sale,
but mandates have been given to investment banks (brokers) to sell any of
the other businesses that will bring a reasonable price.
One of the buyers who is currently "viewing the merchandise" commented:
"My guess is that Haythornthwaite will sell Baan in due course when
profitability has improved further. Foxboro has a poor recent record of
developing new software products and has lost out badly to Emerson's
DeltaV. Haythornthwaite will likely decide that it is better to sell
Foxboro Systems to, say, Siemens rather than to try and rebuild it.
"Haythornthwaite's main goal in the short term is improve cash flow and
rebuild morale. Cash flow is better now, so this part is credible. Morale
will be tougher. The pace of restructuring should slow dramatically, which
will help. But, the lack of strategic direction will hang over employees
for a while. There is supposed to be a presentation in February that should
answer some of these questions.
"The long-term issue is whether the new core Invensys will be capable of
organic growth or whether the years of restructuring have caused so much
damage to the underlying health of the business that a break-up is the only
"Mismanagement has really hurt Invensys very badly, to the point that the
cost of straightening them out and fixing them makes the company (as a
whole) no longer a viable acquisition candidate for anyone. With everything
for sale, most of the majors are looking to buy at least some of the
In the meantime, Foxboro was hit again with layoffs this past week. A loyal
"This time the Invensys Process Systems Customer Satisfaction Center was a
victim. Six service engineers were laid off in the TAC center alone and the
Learning Center was also decimated. The funny (peculiar, not ha-ha) aspect
is that Haythornthwaite keeps saying in his "personal electronic pep talks"
that Invensys Process Systems really needs to focus on the customers, yada
yada yada... And then the group that interacts the most with the customers
is hit hard with layoffs."
Another insider, having himself received the proverbial "pink slip"
"500 people were let go this week - indirect people. What I don't
understand is why they seem to take the low paid people like file clerks
and secretaries. They let one of the foreman go but that was the highest
person we seem to have lost. We were told we have until the end of March to
make a 2% increase or else another 500 will go. We are fighting for our
lives and all they seem to come up with is we have to reduce inventory. How
about trying to sell instruments? The dot.com sales promotion is not taking
off and non-involved people get axed."
Meantime, Invensys stock closed on Friday 14 Dec. at 115.28, a healthy jump
since Allen Yurko was in charge. One wonders where Yurko will turn up in
the New Year. And for how long his other co-conspirator, Board Chairman
Lord Marshall of Knightsbridge, can avoid being booted out too.
Rockwell - management getting ready to eject
Rockwell has steadily been losing USA market share, down to 43% from 47%,
over the past year. The company continues to cut back on product
development, expecting Global Manufacturing Solutions to be the new growth
engine - an ill-conceived strategy.
Major top-level management changes are expected over the next few months,
as Rockwell positions itself to be acquired in the coming year. Meanwhile,
to boost the acquisition price and show increased short-term earnings, more
layoffs are expected in January 2002. Mercifully, the company seems to have
the heart to NOT wield the axe before the holiday season. However, this
short respite is not comforting to many who wait with trepidation.
Rockwell Automation Reviews Fiscal Year 2001 Results and Expectations for
the First Quarter of Fiscal Year 2002
Arthur C. Clarke: Predictions for the 21st century
Just recently, Arthur C. Clarke, author of 2001: A Space Odyssey and
inventor of the geosynchronous communications satellite, joined Ray
Kurzweil and two other panelists by video and phone connection from Sri
Lanka to offer visions of the future.
The science fiction visionary offered his predictions of key events to come in this century.
Arthur C. Clarke's predictions for the next century
- 2002 Clean low-power fuel - new energy source, possibly cold fusion.
- 2004 First publicly admitted human clone.
- 2009 Third-world city devastated by atomic bomb explosion.
- 2009 All nuclear weapons are destroyed.
- 2010 A new form of space-based energy is adopted.
- 2010 Ubiquitous monitoring eliminates many forms of criminal activity.
- 2011 Space flights become available for the public.
- 2015 Complete control of matter at the atomic level.
- 2019 Meteorite impact on Earth.
- 2020 Artificial Intelligence reaches human levels.
- 2021 The first human landing on Mars - with an unpleasant surprise.
- 2023 Dinosaurs cloned from DNA fragments. Dinosaur zoo opens in Florida.
- 2025 Brain research leads to an understanding of all human senses.
- 2025 Full immersion virtual reality becomes available.
- 2040 Nanotechnology universal replicator able to create any object.
- 2095 "Space drive" is developed - star systems visited by robots
- 2100 First humans sent out to nearby star systems.
You might also like to check out the summary of my recent TiE speech.
Jim Pinto TiE speech: 21st century predictions
More on Dean Kamen's Segway Human Transporter
Dean Kamen wants to change the world by changing how cities are organized.
Segways, he believes, are ideal for downtown transportation.
Unlike cars, they are cheap, clean, efficient, and maneuverable. Unlike
bicycles, they are designed specifically to be pedestrian friendly. He
imagines them everywhere: in parks and at Disneyland, on battlefields and
factory floors, but especially on downtown sidewalks.
We had lots of feedback after our coverage of the Segway introduction last
week. We thought you'd be interested to browse further and see for yourself
whether or not Segway is something special.
Segway HT Website
Inside the Segway - flash animation
Time : Re-inventing the wheel
David Gerlerntner - the next computer interface
For many people a new electronic gadget is a disaster - another
incomprehensible users manual or help set, things that break, don't work,
that people can never figure out, features they don't need and don't
understand. All of these are important for people who depend on computers,
which increasingly is everybody.
The desktop metaphor was a brilliant innovation-30 years ago. Now it's an
unmanageable mess and the search is on for a better way to handle
information. The computers we're inflicting on people are more a cause for
irritation and confusion and dissatisfaction and angst than a positive
benefit. One thing is sure - we're going to throw out the crummy, primitive
software on which we rely, and see a completely new generation of software
In this Edge article, David Gelernter of Mirror Worlds Technologies says
the desktop metaphor is over as he explores space, time and the next
generation of computing.
The Edge: Gerlerntner's latest comments
MIT Review: The Next Computer Interface
Technology Toys Buying Guide
What are you looking for this Christmas?
If you're a techno-geek-freak like me, you'll enjoy some of the links I've
provided here for good stuff you'd like to buy for yourself, or talk your
spouse, or kids, or Mom, or someone into buying for you.
Biz-week Online: Technology - What to buy
Biz-week: Technology Buying Guide
A Handheld for every pocket
NY Times: Holiday Buying Guide (8 sections, lots of products)
Responding to my Now I'm 64 Beatles-song, I got a lotttt of birthday
wishes. Thank you friends, one and all!
My colleague and long-time friend Frank Williams [email@example.com] read
me his poetic response over dinner. Here is an extract.
Suddenly, the ghosts of birthdays Past, Present & Future appeared to Jim
Moshe Weissberg [firstname.lastname@example.org] from Israel commented on Dean
Kamen's Segway :
And here are some of the questions they posed to him :
Birthdays Past asked Jim if he accomplished what he set out to achieve
Jim was ready and snapped, "All that I humanly could, I truly believe!"
Then the ghost of Birthday Present began to boldly address Jim
"At sixty-four are you happy with your life?" the ghost quickly asked him
Jim never blinked and looked right into the eye of this bold ghost
"Itís good health, my loving family and friends that make me happy the most!"
Birthday Future moved closer to whisper his question in Jimís ear
Jim stood tall and waited for this ghostís question with absolutely no fear
And to Jimís astonishment what he heard made him smile with content
For Birthday Future said his question would, by e-mail be sent...
"As your friend Ray Zack suggested, the 2-wheel scooter (still offered)
cost but 10% of the current Segway. However, it is more than a bit noisy,
requires unsafe gasoline (how would you like to go to the gas station for a
fill up of one quart?), did not resolve lateral stability issues and
requires routine maintenance. So it was most suitable for younger people
Perry Sink Marshall [email@example.com] was pondering on the messages of
Soft Solutions to Hard Problems and wrote:
"Segway has no lateral stability problems and resolves the longitudinal
ones with its gyros which, I am sure, are not inertial navigation grade. We
all know how much it would cost to manufacture such a device in quantity.
Once it goes down to a price of less than $1000 (which I am sure it will,
and I would buy one at that point...) it will become a tremendous
transportation tool. All it takes to charge is your electric utility
outlet. While this may not be the invention of the century, it is indeed a
great (and definitely ingenious) device."
"I am entirely sympathetic with Jerry Van Ee's sentiment (about the real
problem being the economic gap). A week spent in Brazil three years ago
showed me that even in Sao Paulo, Brazil, a city the size of Chicago with
six times the population - with poverty and violence seemingly hanging out
of every door and window - people still have an insatiable appetite for
American entertainment (movies, TV shows) and news (CNN). The culture there
is European/South American, but the media is American.
"My wife and I spent a day touring the "favellas" (slums) with the director
of a local street kids ministry, and every home that had
electricity had a television, too. My observation was that although the
American media serves as an anesthetic to their dreary existence,
it obviously does little to teach anyone how to escape from it.
"I don't really believe we've caused their problems or exploited them per
se; actually I think they benefit greatly from trading with us, and cheap
copies of our pirated software are plentiful there. But we've all got a
responsibility to be good neighbors - and today, with technology and travel
being what it is, everyone's our neighbor."
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