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 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.
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
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 :
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.
Take a look at Widzer's Book
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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