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
  • eFeedback:
    • 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.

Click 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....

Click 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.

    "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 solution."

One of the buyers who is currently "viewing the merchandise" commented:
    "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 Invensys pieces."
In the meantime, Foxboro was hit again with layoffs this past week. A loyal insider reported:
    "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" complained:
    "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.

Click 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.

  • 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.

Click Arthur C. Clarke's predictions for the next century

You might also like to check out the summary of my recent TiE speech.

Click 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.

Click Segway HT Website

Click Inside the Segway - flash animation

Click 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 very soon.

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.

Click The Edge: Gerlerntner's latest comments

Click 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.

Click Biz-week Online: Technology - What to buy

Click Biz-week: Technology Buying Guide

Click A Handheld for every pocket

Click 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 [actionio@home.com] read me his poetic response over dinner. Here is an extract.

    Suddenly, the ghosts of birthdays Past, Present & Future appeared to Jim
    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...
Moshe Weissberg [mesconm@mescontec.com] from Israel commented on Dean Kamen's Segway :
    "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 (kids mostly).

    "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."

Perry Sink Marshall [perry@tannah.net] was pondering on the messages of Soft Solutions to Hard Problems and wrote:
    "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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