JimPinto.com - Connections for Growth & Success™
No. 234 : 27 July 2007

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

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13 mins.

ABB considering Rockwell acquisition

After almost 15 years of financial woes - over-extended with non-focused acquisitions, asbestos law-suits, big settlements, etc - ABB has successfully moved beyond the crisis years.

ABB just announced results for Q2 2007:

  • Net income doubles to $729 million
  • Continued strong global demand
  • Orders up 26%, revenues up 27%
  • 14.4% EBIT margin on EBIT of $1 billion
  • Operating Cash flow $396 million
With operating profit of 13.6% last year, and a war chest of more than $10B, the automation giant could be preparing to make a major acquisition. They are reported to be considering two: Legrand of France, 2006 revenue $3.74B; US-based Rockwell Automation, $5.56B 2006 revenues. Both are within reach.

After its previous debacle with fragmented acquisitions, ABB will now take a very disciplined approach, focusing on strategic fit, integration costs and opportunities, as well as price.

For years I have been predicting that Rockwell would be sold. Now, belatedly, my predictions may come true. After he took over as CEO from ineffective Don Davis, Keith Nosbusch has done well with Rockwell, raising the stock to heady levels - 70-ish, with market-cap about $11B. But the company has nowhere to go.

My advice to Keith Nosbusch: Acquire something bigger than small-fry ICS/Triplex, or be acquired. With about $1B cash-on-hand, you can do it. If you can't, this may indeed be a good time to exit.

My advice to Fred Kindle of ABB: Rockwell is fair game - go for it!

Click ABB Q2 net income doubles to $729 million

Click ABB preparing acquisitions; Legrand or Rockwell possible targets

Click Rockwell Automation profit gains on better sales

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The rise of the super-rich

How much do you think someone really rich would pay for a really good hamburger? Most people guess $ 20.00. Well, there are restaurants which cater to the super-rich that sell hamburgers for $50.00 and up. And here are some things the super-rich buy too: Franck Muller watches for $736,000. Or Mont Blanc pens encrusted with jewels for $700,000. Or exclusive Louis Vuitton handbags which sell for $42,000. A New York hotel has a $10,000 'martini on a rock' (with a diamond at the bottom of the glass). One restaurant offers a $1,000 omelet. Bling mineral water sells for $90 a bottle.

In America, income inequality used to be the difference between rich and poor. But now it's increasingly a matter of the ultra rich and everyone else. The economy appears to be charging ahead, until you realize that most people are being left in the dust. The "American Dream" of opportunity for all is turning into a nightmare of inequality.

As the rest of the country struggles to get by, a huge bubble of multi-millionaires lives in a parallel world - their own world of private education, private health care and magnificent mansions. They have their own schools and their own banks. They travel in private jets and yachts. Their world now has a name. In his new book, Wall Street Journal reporter Robert Frank has dubbed it "Richistan" (weblink below).

In 1985 there were just 13 US billionaires. Now there are more than 1,000. In 2005 the US saw 227,000 new millionaires being created. One survey showed that the wealth of all US millionaires was $30 trillion - more than the GDPs of China, Japan, Brazil, Russia and the European Union combined.

Meanwhile, America itself is heading towards 'developing nation' levels of inequality. The average US worker's wage increases barely match inflation, 36 million people live below the poverty line, and 45 million have no medical insurance. In 2005, income for the top 1% jumped 14%, while the rest of the US gained less than 1%. The situation is especially bad for those living at half the official poverty level - their numbers are at a 32-year high.

The US government has helped the rich with tax breaks. In the 1950's the proportion of federal income from corporate taxes was 33%. By 2003, it was just 7.4%. Some 82 of America's largest companies paid no tax at all during some of the years of the current Bush administration.

The growth of the super-rich class, coupled with deepening poverty, is starting to tear at the fabric of American society. Even some of the most wealthy - like Gates and Buffett - have spoken about the need to address the "inequality gap", in effect asking to be taxed. Warren Buffett - the third richest man in the world - pointed out that his tax rate was 17.7% of his income, while his secretary was taxed at 30%.

The debate over the booming lives of the super-rich is about the American soul. This is a country where the creation of wealth was seen as virtuous and a source of pride. But now that bloated wealth has started to squeeze the "middle class" out of existence, leaving the haves and have-nots in very separate worlds. This will be the root cause of significant and inevitable change.

Will any of our current crop of Presidential-candidates do something about this problem? One wonders whether they can accept campaign contributions from the wealthy, and still expose the problem.

Click Book - Richistan: The American Wealth Boom and Lives of the New Rich

Click The Rise of the Super-Rich

Click Buffett, Gates team up to give it away

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Technology is making us stupid

People exercise rigorously to stay healthy. How about brain exercise?

With PDAs, smart phones, notebooks and computers, people now have gadgets that serves as their memory. Want to remember birthdays? Just enter the dates in Outlook, which will then sync. it with your phone. You'll be alerted, with reminders in case you forget.

Today, many people don't even remember their own phone numbers, and some cannot recall more than a couple of birthdays of immediate family. They're losing their brain power.

The average person has to remember passwords, pin numbers, license plates, security ID numbers and bank ATM numbers just to get through daily life. Six out of ten people admit to "information overload". Most people admit to using the same password for all their accounts, a severe security risk.

Since the availability of auto-dial phones, some people's memory is starting to atrophy. The less you use your memory, the worse it gets. Perhaps it's significant that older people have better memory. Why? Because they've kept training their brains to remember.

The good news is that you can exercise your brain without memorizing numbers. Crossword puzzles and games like Sudoku provide mental stimulation that can keep your memory sharp.

I train my brain by doing my regular eNews, and responding to ALL the feedback. Try me.

Click Mobile Phones Are Making Us Stupid

Click Can TV Make Us Stupid?

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How to make a dynamic Marketing pitch

You go to a meeting. Everyone has arrived. The lights are dimmed and the presentation begins. The presenter keeps showing slide after slide. Some in the back row actually doze off, while many others' minds drift off. They're all being "slideswiped".

You've heard the advice about how to make a presentation: "Tell what you're going to tell them; then tell them; and then tell them what you told them". That almost gives you a license to be boring. Forget it.

Especially when you're giving a Marketing or Sales presentation, take some lessons from Steve Jobs. His iPhone introduction had five lessons for making a superb pitch (weblink below).

  1. Build Tension - Generate drama, and a couple of surprises
  2. Stick to One Theme Per Slide - One slide, one key point
  3. Add Pizzazz to Your Delivery - Vary your speed and tone
  4. Practice - don't wing it; rehearse your presentation
  5. Be Honest and Show Enthusiasm - Loosen up, have fun
You know what? Steve Jobs is far more engaging today as a presenter than he was many years ago, because he worked at it. We all have room to improve our presentations. Develop your own special style. And practice!

Click PowerPoint Presentations: The Good, the Bad and the Ugly

Click Steve Jobs' Greatest Presentation

Click The Seven Deadly Sins of Powerpoint Presentations

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Robot Podcast update - introducing Jeanbot

I've been podcasting JimPinto.com eNews regularly for over a year - since March 2006 - and some 300+ people seem to listen regularly. Indeed, those who subscribe to these podcasts over Apple iTunes and other RSS services, seem to like the "automatic" downloads and listen later, when they're ready.

As I previously mentioned (eNews 12 July 07) recording these audio podcasts is a chore - it takes only about 20 minutes to speak and record, but editing down to the final 12-15 minutes is something I don't particularly enjoy doing it, and it takes a couple of hours to do it well.

So for the last eNews issue, I hired Jimbot (my robot speaker). The feedback was mixed - many thought it was OK, some thought it was "fine" though perhaps a little soft (I'll make it louder).

Anyway, I thought I'd try Jimbot's female twin - Jeanbot - for the next podcast. Perhaps you'll prefer a female voice.

Please listen to the latest JimPinto.com eNews #234, 27 July 2007. Podcast, or download and save the MP3 file. Tell me whether you prefer Jeanbot or Jimbot, and how you think they can improve. It sure makes it easier for ME to do the podcast this way.

Please send me an email (click the link below) to let me know.

Click Listen to Jeanbot's audio podcast of this issue of eNews

Click email: Hey Jim - here's what I think of Jeanbot

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Gerry Shand [gerry_shand@geminicorp.ab.ca] from Canada comments on US government overspending:
    "Other countries keep overspending too. A good example is unfunded pension liabilities. They know things like this are coming but have no idea how to raise the money to pay for it. The current generation of politicians will exit, and let the next generation try to clean up the mess. Trouble will start when 2010 hits and the first of the baby boom generation becomes entitled to a pension.

    "Then you have things like 'General Revenue' funds fed with taxes from multiple sources that pay for all sorts of weird and wacky programs. Here's a good example: Of all the gasoline taxes collected in Canada, only 5% is spent on maintaining existing or building new and needed infrastructure. If we used 100% of these revenues on roads, there would not be a single pothole in Edmonton and all the roadways and side streets would be perfect.

    "The thing about General Revenue funds is that because of the multiple inflow and outflow streams, auditors find it almost impossible to track where all the money ends up going. Kind of sounds like money laundering if you ask me.

    "Trying to print more money would only serve to de-value the currency further. Future governments are going to keep proving the point that their main raison d'etre is to take money out of circulation through waste, inefficiency, and duplicity."

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Ken Heywood [kheywood@pcsmi.com] takes exception to Jonathan Schacher's assertion (eFeedback July 12, 07) that 'corporate greed' is the root of our outsourced manufacturing problems:

    "Corporate boards and executives are just satisfying the need to make a profit for their stock holders. Can you blame them for doing their jobs and collecting bonuses? Then whom do you blame? Look in the mirror for the answer.

    "I blame the American consumer. You, me, everyone who consumes goods. We go for the cheap price. We settle for products that are cheaper, than those that are made in America. We buy vast amounts of Chinese products from Wal-Mart. Some of this stuff is pretty good quality. Other things, like tainted toothpaste and dog food, could kill us.

    "We pay a premium in America for a higher standard of living. That premium pays for agencies like the FDA, OSHA and others, that help keep us healthy and safe with inspections and law enforcement. These 'cheap' manufacturing areas have less or none of the product and workplace standards that we enjoy. We talk about lower production costs in these places. Well, lower production costs involve more than just wages.

    "Do we settle for the lowest price? As consumers, we have a choice. My wife picked up a bottle of apple juice at the supermarket. It looked good and had a pretty label. When she glanced at the fine print on the back label, it read 'Product of China'! Why in heck would I prefer apple juice made from apples grown and processed in China, then shipped in containers overseas? To save five cents?

    "I'm all for the global economy. But I think we need to take a look at our own spending habits which come from an appetite for 'things' like all the latest toys and gadgets. We want the big house and the boat and HDTV and Xbox. We can't afford them, but we want them anyway. So we buy cheap and on credit.

    "It's time to re-evaluate how we spend our money and our lives. It starts right here at home. As a result of consumer spending choices made 20 years ago, some products just aren't made here anymore. The fix isn't going to happen overnight, but if we start making good choices now, maybe our grandchildren will find pride in the 'Made In America' slogan. Stop complaining and get started on the solution. And the solution starts at home!"

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Rick Lamb [relamb@MidTechV.com] says that the US election process is no different now than it's ever been:

    "Do you think the election process was any different in the 1800's? We have email now, instead of people passing out flyers, and we have TV usurping the role of the local newspaper. But is the propaganda and psychology any different now than it has been all along? I doubt it. Humans were using "sophisticated" propaganda and psychology before there were even names for such things. You can probably take almost any political debate in the history of this country, remove the specific content/topic and date, and the rhetoric will be the same.

    "The general populace has MORE opportunity to be informed now, than ever before. Despite the inundation of 30 second sound bytes, you now HAVE the opportunity to research facts on your own, get data, and form your own opinion. Did you have that ability in 1888? No, you lived with news spread by gossip, the pony express, and the local printing proprietor, especially if you didn't live in a big city.

    "Politics started with the caveman's first two candidates for tribal leader, and human nature has not changed since. There were always threats to our survival, there are always bullies trying to wrest power, and there is always the politics of human nature. It's ALWAYS been about who had the best sound byte, propaganda and psychology."

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