JimPinto.com - Connections for Growth & Success™
No. 9 : July 24, 2000


  • BAAN & ICS - Companies in trouble
  • Pointers: Don't Solve Problems !
  • More & More Memory - EMC
  • eMarkets - The Big-guys Move in
  • eFeedback - Power Politics

Downhill Debacle

What happens when a company gets into trouble and cannot recover? Well, the natural answer is that it gets bought out or sold off or merged into another entity. Something they have is valuable to someone else, a competitor perhaps - products, technology, market-share, people, location. But sometimes, the rot goes much deeper - and there is very little left to save.

Let's review two going-on-as-we-e-speak examples:


The enterprise software company based in the Netherlands was once worth $ 10b. Invensys recently made an offer worth $ 700m (about 6% of the peak value). The Invensys bid still remains a question, while shareholders squabble over the remains. The Invensys offer is conditional on 95% of Baan's shares being tendered in support. There is some speculation that some institutional shareholders might reject the offer to reap tax write-offs. If Baan goes bankrupt, one major holder could get about $131m in tax benefits on its investment, while selling its stake to Invensys would yield only about $40m. Baan's board and management support the offer, with warnings that if the takeover offer is unsuccessful, it will reduce the company's viability, fuel a management shakeout, and put survival in question. The Invensys deadline is July 25 (tomorrow, as this is written) and the end-result is still anyone's guess.

Click Take a look at the latest Invensys-Baan story

ICS Group (UK)

An interesting example of things gone sour in industrial automation is ICS Group (in the UK). They bought a bunch of dogs-MAX Control Systems from Leeds & Northrup which itself had been sold off piecemeal to Honeywell and others) and also Triplex and Transmitton. At about $110 million in sales a couple of years ago, its recent market-cap of $17 million (down from about $100 million) reflected serious losses and sales decline. To bail them out of default on bank-loans, a cash-bid of just $2.5m was made by a low-ball venture group in late July. The bid has apparently been accepted by the board of directors, though rumors abound that rival bids are brewing - probably wishful thinking on the part of disgruntled shareholders.

The problem with this type of company is that, although it has some good pieces and management, nobody wants to buy it, because nobody wants the wants the headaches. The only ones willing to buy a pig in the poke are vulture-capitalists who will carve up the carcass and sell it off piecemeal.

Never play with pigs...

Some time ago, I asked a venture-capitalist friend why he never got involved with turnarounds. His reply: “Never play with a pig. You both get dirty, and the pig likes it….”

Pointers : Don't Solve Problems!

Peter Drucker preaches: "Don't solve problems!"

This sounds strange, because most of us think that management involves solving problems. The key point Drucker is making is this : For growth and success, your energy should be focused on opportunities!

Problems drain enthusiasm, energy, resources and time! Those are needed to manage and maximize growth and opportunities. Problems suck up the very things you need to stimulate success.

Suggestion: Outsource your problems, give them away! Find managers or agencies that will solve the problem on a temporary basis, and will disappear when it is done.

Quote : When you're in a hole, the first thing to do is STOP digging!

Read Peter Drucker's latest book : "Management Challenges for the 21st Century"

Look at the Drucker Book Click for my brief review and links to Amazon.com to get your copy


Hey, I just got a new computer, 1 gigaHz, 128Mb RAM, 50 gigabytes hard-drive. I was happily moving everything from my 2-year-old 200Mhz computer, when I suddenly realized - how do I backup that 50 gigabyte disk? Ouch #@! Sure, a backup tape (which I don't have). Or, another computer with a 100 gigabyte disk? This is where one realizes that probably the only choice is off-line-storage, via the Internet (my cable modem provides high-speed access).

In its July 2000 issue, Electronic Business has profiled how in the course of a decade EMC has been transformed from a floundering company on the brink of bankruptcy to “an 800-pound gorilla in the storage business".

Click Read the Electronic Business story

B2B Echanges - the big-guys move in

The Internet is described as the great equalizer because it gives small businesses the chance to compete with big brick-and-mortar, brand-name companies. But even in the Internet economy, fat cats are finding ways to get fatter - by collaborating in e-marketplaces.

The e-marketplace model was originally meant to be a neutral ground on the Net where companies could streamline supply chains or find new business partners. But this year, leading companies in a wide range of industries have been rushing to form their own e-marketplaces. And with that comes the fear that a significant group of buyers or suppliers could exert unfair market power over smaller players.

Click Read this interesting eWeek article


Regarding my item on Power de-regulation politics, old friend Joe Shull, VP Marketing at Mt. Sierra College, Monrovia, CA. e-comments :
    "Your piece on the doubling electricity rates in the San Diego area is interesting. It is tempting to send dinosaur utility poobahs a copy of Theodore Levitt's "Marketing Myopia" originally published in the Harvard Business Review in the 60's (updated in the 80's to include a discussion of the utility industry). While these guys fiddle away, defining their business as distributing electricity over an antiquated and unsightly system of wires, chemical companies, such as Dow and Union Carbide and their own parent, Sempra Energy, are developing fuel cell technology. On the other hand, perhaps they should be given credit for paving the economic path for the introduction of the cell as an alternative power source. It may even be part of their strategic plan. Have faith -- a better, cleaner world is coming!"

Dave Hillquist, Plant Engineer at Inland Paperboard & Packaging, Inc. Ontario, CA. e-says :
    "As the prospect of deregulation approached reality, it was apparent that those who addressed the subject publicly were almost universally ignorant of its essential details. Years of contact with local utilities have led me to think of them as bureaucratic dinosaurs, heedlessly spending vast sums of money without regard for results. This reveals reasons why deregulation is likely to fail: first, because the utilities themselves are central players in deregulation, and second, because the vast database of information on which deregulation is founded comes largely from this source of questionable validity."

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