JimPinto.com - Connections for Growth & Success™
No. 8 : July 17, 2000


  • Invensys & Baan - deadline extended
  • De-regulated Power Pricing
  • Self-Organization: The Next Big Thing?
  • ARC Projects Automation Web-sales at $42b by 2005
  • IndustrialVortex.com Stops Operating
  • Useful Book - Upgrade to First Class Travel

Invensys + Baan - deadline extended

Invensys Invensys recently made a "gutsy" offer to buy BAAN, the ailing Dutch business software company (see JimPinto.com eNews No. 4 - June 5, 2000). It now seems that the deal is now running into some opposition from stockholders.

Invensys Baan was caught in a downward spiral of falling revenues, deteriorating mix, cash outflows, senior management turmoil and eroding customer confidence. Without Invensys, Baan would probably have gone bankrupt. The Invensys bid is only 6% of Baan's peak share price. But if the offer goes through, some fear that Invensys itself will be dragged down.

There are two phases to Invensys’s recovery plan: first stem the losses and then grow the company. There is little doubt that Invensys will succeed in its cost reduction plan but some skepticism that it will be able to return Baan to growth.

Even though buying Baan is high risk, it is considers to be largely a defensive move on the part of Invensys, which is struggling to retain the savings from its merger integration program while conditions in the process automation industry continue to deteriorate. Faced with a lack of internal growth prospects, the proposed purchase of Baan represents a high-risk attempt by Invensys to raise its growth profile.

If the Baan deal starts to turn sour and the Invensys share price collapses, then a predator might launch a bid for Invensys. If the price of closing Baan is more than offset by the depressed valuation of the entire group, then Invensys becomes the prey. As Invensys stated at a recent strategy presentation, any top 5 controls company could buy any other top 5 controls company with limited anti-trust problems.

This past week, Invensys has announced that it is extending the deadline for its offer to acquire Baan to Tuesday, July 25, 2000. The cash offer of Euro 2.85 per share is not being increased and the 95% acceptance condition is not being waived.

Failure to accept the offer increases the likelihood that the remaining condition of the offer will not be met and Baan will be left to face a difficult and uncertain future.

On the other hand, if the Baan deal goes through, the world will be watching and waiting to see how Invensys does the turnaround.

In any event, the Pinto prediction stands - the list of industrial automation majors will shrink before year-end 2000. It's simply a matter of who will buy who. Stay tuned....

De-regulated Power Pricing

So, power has been de-regulated - and many of us are already feeling the effect - through higher power bills. We've had a lot of heated discussion in San Diego this past week, on skyrocketing power bills. The power company says it doesn't produce the power (glossing over the fact that it's affiliates do) but only distributes it. Some people are refusing to pay.

To achieve the benefits of centralization, without the costs of a monopoly, we have that interesting oxymoron, the Regulated Monopoly. Remember when it was illegal to connect your own phone to the Bell network? Remember when the use of non-IBM printer paper voided the warranty on your entire IBM system?

An interesting e-discussion between old friends, Bob Meijer, Ray Zack and others, raised these interesting questions :

Are power companies in imminent danger of running out of power? Are "distribution costs" really 44% of every $$ charged? Will prices drop if there is competition? Might power companies argue increases - to cover "fixed" costs? How much "more" power will be available with a 50% price increase?

Self-organization - the next BIG thing?

Dick Morley reminds us that "new" ideas are really quite "old" - they have incubated for a while before they get to be in vogue.

A recent Wall Street Journal article mentions the work on self-organizing systems, done at the Santa Fe Institute in the early 1990s. Although the Santa Fe Institute deserves credit for promoting the idea and for extending it, the earliest use of the term was in the 1960s.

The WSJ cites eBay as an example of self-organization: "What really put self-organization on the map is the auction site, where buyers and sellers do much of the company's heavy lifting. It's the customers who create all the content, and it's their ratings that put sellers on the recommended lists. Suddenly, it seems, lots of people like the idea of unloading the work onto their customers. For one thing, it keeps expenses down..."

So, it does take about 40 years for an idea to go from the topic of a scientific conference to the front page of the Wall Street Journal.

ARC : Automation Products web-sales $42b by 2005

An ARC market study reports that web sales for Automation Products, which totaled $247 million in 1999, will expand by virtually 200 times that value within 5 years. ARC notes that "the historically conservative automation market only began earnestly embracing Web sales in 1999, and automation suppliers of the 21st century must be aggressive in linking customers, suppliers, business partners and employees via the Internet."

IndustrialVortex.com stops operations

In spite of the ARC projections, and while the RFQ volume at the recent industrial B2B startup IndustrialVortex.com recently attained a respectable level of $ 20m, the company was "unsuccessful in raising a 2nd round of funding and has ceased operations", according to Chuck Steinberger, Founder & Chairman.

If you have any questions or wish to contact any of their talented group of IndustrialVortex ex-employees, please contact Chuck directly :

Click Chucksteinberger@home.com

Cute & useful book : Passport to Luxury Travel

Follow the advice laid out in Joel Widzer's The Penny Pincher's Passport to Luxury Travel and you may find yourself wallowing in the pleasures of luxury while staying within your budget - especially if you travel often and stick like glue to one company. Grateful airlines and hotels often respond to such brand loyalty with free seat or room upgrades. Widzer explains how to ask the right questions to get the desired results. If you're paying full price because you booked last minute, asking for perks often gets you luxury extras. Widzer shares strategies for saving money, regularly going first-class on airlines, hotel rooms and car rentals. This is a book for those willing to do their homework to go first class. Take it along on your next sales trip.

Click Take a look at Widzer's Book

Wirth's Law

Nicklaus Wirth is at the Swiss Federal Institute of Technology in Zurich. He says software gets slower faster than hardware gets faster. Or, referring to Intel and Microsoft, Grove giveth and Gates taketh away......


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