JimPinto.com - Connections for Growth & Success™
No. 76 : February 7, 2002

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

  • Automation Update 2002 (2)
    • Yokogawa cancels Johnson Controls joint venture
    • GE buying Legrand?
    • Tyco 'Enronitis' - purchase of Invensys Flow-controls off
    • Invensys fire sale of battery business
    • Eaton Rockwell relationship heating up
  • Web water coolers - gossip and chitchat
  • Work, play and romance in the new age neighborhood
  • New Book: Flesh & Machines - How robots will change us
  • Poem: The perfect funding
  • eFeedback:
    • OK to download free music? Response from a 'struggling musician'
    • Notes on the movie - Beautiful Mind
    • Dangers of buying into companies which face extinction

Automation update 2002 (2)

Yokogawa cancels Johnson Controls joint venture
Yokogawa will cancel the joint venture agreement with US-based Johnson Controls and sell its 45% stake to Johnson for an undisclosed price on April 3. The JV was capitalized at only $ 6m and generated revenue of about $220m in fiscal 2001.

The Johnson relationship with Yokogawa was "ugly", reports a knowledgeable insider. The Japanese JV was profitable in the past, but probably not now; the US JV was never profitable (possibly because of transfer pricing etc.). Yokogawa wanted the US JV as an entrée into the US measurement and control market, which they got. Along with the rest of the Japanese economy, Yokogawa is hurting and needs cash. The time is right to sell the JV off.

Click Johnson Controls to acquire remaining JV interest

GE buying Legrand
GE is now studying an offer to buy France's Legrand, the French maker of electrical products that Schneider was ordered to sell by European antitrust regulators. Buying Legrand would help GE expansion in Europe after the EU blocked its $47b purchase of Honeywell last July. The EU vetoed Schneider's 7 b euro ($6 billion) purchase of Legrand in October, saying it would stifle competition in the electrical-equipment industry.

Schneider bought 98 percent of Legrand and also took on 1.5 b euros of Legrand's debt before the EU rejected the takeover. The sale to GE will fetch about 4.5b euros, or about 1b euros less than it paid. Hmmm.

Invensys - battery business fire sale
To relieve its debt burden, Invensys will be forced to take a $310m exceptional charge this year after selling its industrial batteries business for a disappointing $505m. Invensys was forced into the disposal of one of the company's best businesses because of the group's $4.5b debt burden - the yucky Yurko legacy. The disposal of the Energy Storage Group was priced well below the $600m sales it is expected to generate this year.

Click Debt burden forces Invensys sale of battery business

Meantime, the Tyco acquisition of Invensys Valve Group seems to have been put on hold after the announcement of the breakup of Tyco into 4 companies. The possible sale included 12 companies and the price was something like $700m, with sales about $400m. Now, sale to someone else will probably fetch a lot less, forcing another write-off.

This week, Invensys stock fell below 100p again as some analysts took on a dimmer view of prospects. Results of the "strategic review" will be presented to analysts by CEO Rick Haythornthwaite on Tuesday 19 Feb. Employees are anxiously waiting to see who is in and who is out (non-strategic companies will be up for sale).

Pinto Prognostication: Invensys itself, the "strategic core" companies, will be sold off anyway, sooner or later.

Click Profit-warning gossip hits Invensys

Tyco gets 'Enronitis' - Invensys purchase on hold
Since taking over as chief executive in 1992, CEO Dennis Kozlowski, the 55-year-old architect of Tyco's growth, has spent more than $50b on acquisitions. It now transpires that Tyco kept $8b in acquisitions from public disclosure. This triggered a sharp fall in Tyco stock.

Click Tyco's Kozloski: Hard man with bite, who never barks

Eaton Rockwell merger repored heating up
An insider reported: "things are getting hot at Cutler-Hammer concerning the possible Rockwell acquisition." In mid-January, Eaton's Cutler-Hammer eliminated 20% of their sales force, including their automation group - rumor has it "to make room for a major control/automation purchase." If you look at most of the people now in charge at Cutler-Hammer you will see an Allen-Bradley who's-who.

Web water coolers

Have you read the book: The Cluetrain Manifesto? The book heralded the end of secretive goings-on at the top - the advent of open person-to-person email between employees, customers, competitors, vendors - anyone who was interested. Nothing a corporation says or does can remain hidden anymore.

Water cooler chitchat is only as good as the people gathered around. The same is true online and web sites dedicated to inside-company scoop, gossip and rumors are only worthwhile if people log on and indulge in free-for-all banter about their bosses, salaries and co-workers.

We did find some sites where employees dwell on industry issues and workplace woes. Some live up to their tell-all potential.

Go lurk...

Click The best of the water coolers

Click The Cluetrain Manifesto

Work, play & romance in the new age neighborhood

The removal of travel and communications restraints in the new age re-defines the neighborhood, workplace and playground. The Internet now shrinks the world to a global village and vastly expands participation. Today, people are working, playing, socializing and romancing in a global village.

You might enjoy my new article on this subject, published in the popular webzine Spark Online, February 2002.

Click Read Pinto's "New age work, play & romance"

Click Take a look at the popular webzine Spark-online

New book: Flesh & Machines - how robots will change us

The world of HAL and Data, of sentient machines, is fast approaching. Indeed, in some ways it has already arrived, as humans incorporate bionic technology and as humanlike machines increasingly take on the work of humans.

MIT professor Rodney Brooks has been involved in this transformation for decades. Read his new book (just published - Feb. 2002) !

Click How Robots will change us

Click Ray Kurzweil's review of Rodney Brooks' book

Poem: The Perfect Funding

During these days of the dot.com demise and stock market decline, funding of new tech-ventures is difficult, if not impossible. Indeed, new terminology has arisen - the "down-round" - new investors coming in at a significant discount from earlier funding, something unheard of in the past.

But, one high-tech entrepreneur found funding for his high-tech venture in San Diego - beyond his wildest expectations. You might enjoy my poem describing the process, published in the popular San Diego magazine The T Sector.

Click Poem - The Perfect Funding

Click Popular San Diego magazine The T Sector


Regarding the free downloading of music and software through P-to-P programs like Morpheus, Henry Swanson had expressed an opinion that struggling musicians and software developers deserve to be paid for their work.

Jonathan Point from Australia [jonpoint@start.com.au] gives us the 'struggling musician' view:

    "My years of battling with multi-national music corporations has taught me many things:
    1. Music corporations are in business to make money - nothing to do with making music.
    2. No 'struggling' musician ever lost money because someone copied their music. Unless you are a current top-40 player (not a big number out of the thousands of musicians), you don't get much from sales. You do get paid a measly retainer, preventing you from undertaking work with anyone else!
    3. The only way that anyone can hear what's current is to hear it. The record company don't advertise because they haven't picked it as their flavor of the month. If record companies spent a little on lesser musicians, they'd have more successful artists; but the short-term profit wouldn't be there.
    4. Profit belongs only to the wholesaler (technically the record company) and retailer. I know many people (big names from the past) whose music is still heard around the world, but they only get a few dollars per month.
    "So, as a 'struggling musician', I implore everyone to go out and listen, download, share and compare all the music you can. It's the only way you're gonna hear it! Of course you won't hear this from any 'major contract' players because their contracts forbid them even to admit that it is possible to access their music except via the 'proper' channels."
Byron Goldstein [tek_experts@hotmail.com], from the previous marketing/advertising/pr agency for Eurotherm BI (before Invensys), wrote regarding the movie "A Beautiful Mind" :
    "I too enjoyed the film. Good acting, interesting subject matter, great presentation. However, it was a little bit Ron-Howard-syrupy... And, it was not entirely factual, according to Nash. OK, so it wasn't a documentary. As a film it was good. But we should not be mislead to think that it totally factual. If you want to read a contrary review, see the New Yorker - sometime in the past few weeks."
Neil Brown [neil.brown@rtel.com] from Real Time Engineering Ltd. in Scotland commented on the "automation majors":
    "I have been warning clients (several of whom should know better) about the strategic dangers of buying into technologies and/or vendors that face imminent extinction. My own views are in line with yours, but perhaps a bit more radical. If you look at the history of digital businesses, it's all brutal. Volume brings cash, allows product development spend, leads to volume. Often, there is only one winner (e.g. Microsoft), seldom more than two or three."

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