JimPinto.com - Connections for Growth & Success™
No. 123 : 24 June 2003
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
Contents:
Click on any item to jump directly to that item
JimPinto.com format comments
Many, many people like the new web-format - the colors and
the hotlinked contents which allows jumping back and forth
between the items.
But some (several hundred people) preferred the simple-text
version because the could not immediately browse on the web
for a variety of reasons - some read on a PDA, some receive
it on their laptops and read when they travel. Honeywell
people complained that the company blocks their web-access,
and so they can only read JimPinto.com eNews via email.
So, with this issue of eNews, we'll satisfy BOTH types
of subscribers! If you prefer web-access, you are already here!
Or, if you prefer the text version, you can continue to
receive it by email.
The only problem that remains is that this complete-text email
is longer than just a summary (which some people prefer). And
a longer email is more likely to be rejected by spam filters.
Whatodo...?
GE-Industrial acquisitions - strategic mis-direction
Almost 3 years ago, when CEO Jack Welch was still around, GE made
a bid to buy Honeywell. Most analysts felt that GE wanted Honeywell
because of its avionics, aerospace and plastics businesses. Many
(including me) thought there was no real interest in Honeywell IS
(Industry Solutions) which GE would probably divest to someone like
Siemens or Schneider.
But then the GE/Honeywell deal was thwarted by the European
Commission, and Jack Welch retired, leaving GE In the hands of
CEO Jeffrey Immelt. Following Welch's departure, it seems that GE
has become more interested in industrial acquisitions, as part of
its growth strategy.
GE routinely makes 100 or more acquisitions a year, mostly by GE
Capital which recently acquired Heller Financial for $5.3b. But
this is still far smaller than the $43b GE wanted to spend on
Honeywell.
It seems that someone has come up with the strategy that GE can
generate industrial business leadership (Jack Welch's famous
directive - be No. 1 or No. 2 in a business) more effectively through
steadily acquiring a bunch of smaller pieces, rather than a larger
lump like Honeywell.
This past week's acquisition of relatively tiny Mountain Systems
by GE-Fanuc signals the latest in a series of small (for $130b GE)
acquisitions. The list includes:
VMIC (Aug. 2001); Praxis (Oct. 2001); General Eastern Instruments,
Kaye Instruments and Thermometrics from UK-based Spirent UK - formerly
Bowthorpe (Nov. 2001); Interlogix (Dec. 2001); BentleyNevada (Jan. 2002);
EuroDiesel (June 2002); Druck (July 2002); Novasensor (Aug. 2002),
Panametrics (Aug. 2002); Ion Track (Oct. 2002); Intellution (Oct. 2002);
Info Graphics Systems (Nov. 2002); Osmonics (Dec. 2002); RAMiX (Mar. 2003);
SI Pressure Instruments (June 2003); Monitoring Automation Systems (June 2003);
Mountain Systems (June 2003).
All these companies have been acquired since mid-2001 (a few months
after the Honeywell deal was squashed). None of them are much beyond
$100m in annual revenue, most much smaller. The latest, Mountain
Systems is only about $10m - though it fits well with Intellution,
which GE-Fanuc acquired recently from Emerson (Mountain developed
the Historian module for Intellution's Fix).
Pinto Prognostications:
This is the third or fourth time GE has attempted an entry into
the industrial business sector - and they made serious mistakes
(and losses) each time.
After Jack Welch left, whoever is responsible for strategy is making
a bad mistake. They do not seem to recognize that "industrial" is not
just one market, but a vast, fragmented conglomeration of vertical
segments, each with special needs and demands.
In each of the acquisitions mentioned, GE entered the bidding as the
500-pound gorilla and clearly overpaid - in some cases almost twice
the nearest bidder. GE expects to generate leadership through good
management and revenue consolidation. Instead, they damage the market
and cause problems for customers, employees and competitors.
Jack Welch understood this problem well.
Right now, he is probably having a fit....
GE Fact sheet - Acquisition Profiles
Former Panametrics owners sue GE after acquisition
Honeywell for sale - GE buys (Oct. 2000)
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