JimPinto.com - Connections for Growth & Success
No. 78 : March 5, 2002
Keeping an eye on technology futures.
Business commentary - no hidden agendas.
New attitudes, no platitudes.
- Automation Update 2002 (4)
- Invensys re-organization reaction
- Honeywell gets a big bucks new boss
- Rockwell Automation webcast and forecast
- New Sony AIBO ERS-220 robot-dog - how robots will change us
- Open letter from Dick Morley on Modicon
- Aquariums on your screen - P2P ocean windows
- Crony Capitalism
- What is Allen Yurko doing?
- Invensys comments on Emerson DeltaV
- Downloading free music
Automation Update 2002 (4)
Invensys re-org reaction
Rick Haythornthwaite intends to sell off business that generate about
one-third of Invensys revenues, with margins of 10.8%, compared with an
average of 6.6% for the businesses he is keeping. Some people think this is
because some of the lower margin businesses left behind are virtually
unsellable. Margins in the production management side (which will remain)
are as low as 2%.
Debt is still the big problem. Many of the businesses for sale provide the
cash flow - about 2% of sales - that Invensys generates. The 60%-of-sales
price target for disposals (the whole group is valued at about
one-times-sales) indicates how anxious the bankers are for debt repayment.
The sell-off is necessary for Invensys to refinance GBP 950m of loans due
by August. In the meantime, interest rates on the loan balance are likely
Invensys strategy review
UK Financial Times - Invensys Digging Deep
Haythornthwaite's mission is to sell Invensys at a good price. He is doing
as well as can be expected given the mess that he inherited from Yurko. The
"core" strategy did not impress the market - share price continued to drop.
By the way, Invensys Chairman Lord Marshall of Knightsbridge is about to be 'sacked'.
The talk about saving the "core" by using "best practices" and providing
"solutions" shows that Haythornthwaite is simply out of ammunition. What
else can he say?
Invensys is putting up for sale what is saleable, at a price better than
book value. What is left (and not saleable) is "consolidated" and will be
sold off later as part of the group. That's the best way to get the best
Mike Bresler [email@example.com] comments:
UK Independent - Marshall faces Ax at troubled Invensys
"Based on many years of watching Monty Python's Flying Circus, I believe
the proper British term for losing one's job is 'sacked'. Wouldn't it be
fun to see John Cleese and company do a skit about the Invensys fiasco and
all the related 'sackings'?"
Honeywell gets a new boss with big buck$$$
After the failure of the GE merger, within a year of taking over from
booted Bonsignore, Larry Bossidy (66) has (as expected) resigned from
Honeywell and has named TRW CEO David Cote as his successor. The
announcements made the usual claims about how good David Cote would be as
CEO (like Bossidy, also ex-GE) and how he would take Honeywell to the next
It's interesting to note how a CEO is "lured" to switch in this
environment. Bossidy and the Honeywell board evidently felt that David Cote
was worth the bug bucks they shelled out.
Here are the details of David Cote's "compensation package":
- Initial annual base salary is $1.5 million, with a guaranteed bonus of
$1.9 million this year. Annual salary can be increased, but not decreased
each year, at the discretion of the board.
- Starting next year, an annual bonus of up to 125% of annual base salary,
based on Honeywell's short-term incentive plan. Also, eligible for
additional equity compensation of up to 230% of total base salary and
target bonus for that year.
- Additional $5m to compensate him for the bonus and incentive awards he
would have received had he remained at TRW; this will be reduced by any
amounts he gets from TRW.
- A sign-on bonus of one million stock options that vest over the next six
years. 770,000 shares of Honeywell restricted stock and 625,200 stock
options to make up for equity compensation lost in switching companies. The
restricted stock vests through July 2012, while the options have a 10-year
term and vest incrementally starting this Nov. through Feb. 2004. Another
550,000 stock options will vest over the next three years. (See if you can
figure that out...)
- Five-year contract includes use of company-owned aircraft, a retirement
plan and life insurance.
David Cote is known to be a tough taskmaster and
merciless with cutting head-count. After all the cleanup and layoffs are
complete, he has the job of generating growth. In my opinion, his focus
will be avionics; he will keep Honeywell Home & Building (energy management)
but will divest the poor-performing Industrial Automation & Controls (IAC) soon.
Bossidy resigns - TRW Cote named as successor
Honeywell will pay new President at least $3.4m in 2002
Rockwell Automation webcast & forecast
Chairman & CEO Don Davis reviewed Rockwell Automation's business at a
presentation that was webcast from the Salomon Smith Barney Global
Industrial Manufacturing Conference on Wednesday, February 27, 2002.
Rockwell expects sales in its fiscal second quarter, which ends in March,
will be essentially equal to 2002 first quarter sales, with a modest
improvement in earnings per share. There was no forecast beyond the current
The company's name change to Rockwell Automation, Inc. became legally
effective after Monday, February 25, 2002. This week (March 5 02) Rockwell
stock took a nice up tick.
In my opinion, this performance (with some RIF casualties) is in preparation for
sale of Rockwell Automation later this year.
Listen for yourself - Rockwell Automation webcast
Rockwell Automation Reaffirms 2Q Outlook & Confirms Name Change
How robots will change us - Sony's new AIBO robot-dog
Don't expect intelligent robots to suddenly appear as "replicants" to
challenge humans. Expect a gradual appearance as faceless computers that
win chess championships, as well as intelligent pets that get smarter and
Sony's AIBO robot-dog family is expanded with the latest addition - AIBO
ERS-220 - witb the latest in robotic technology. AIBO is now even more
expressive and interactive, with a slick new futuristic look. Sony
describes the new robotic dog as having "enhanced functionalities" that
will "enable customers to experience deeper emotional ties with the AIBO".
This latest AIBO exceeds expectations, with fully interactive features that
make it a perfect 'pet'. New features include 21 lights (LEDs) in strategic
spots on its head, mainly on its face and visor. It has more expressive
communication, enhanced by the retractable headlight on its head. Enhanced
sensors allow it to interact with its owner in a more effective and
realistic way, with "16 degrees of freedom" - a head sensor, 3 joints in
its neck and three joints in each of its legs.
AIBO has new motion detection, photo-taking facility and the ability to
change the sounds it makes while it walks. The Boost Mode provides an added
mood that shifts when it becomes excited, curious or alert. It also has a
75-word vocabulary - compared with 25 words for the old AIBO.
Robot World review of AIBO ERS-220
Sony Aibo website
Rodney Brooks (Director of the MIT Artificial Intelligence Laboratory and
Chairman of iRobot Corporation) explores many themes related to life with
robots in his new book "Flesh & Machines". The book centers on Brooks'
passion for creating what he calls "situated creatures" which we can
eventually regard as our teachers and companions.
Rodney Brooks Book: Flesh & Machines - how robots will change us
Visit Rodney Brooks' Personal Page
Open letter from Dick Morley - on Modicon
I thought you’d like to read this open letter from Dick Morley, credited
with being "the father of the PLC" while he was with Modicon. The company
is now part of French Schneider Electric.
Open Memo to Jim Pinto
From Dick Morley
Subject: Modicon, my baby.
About 30 years ago, my partner, George Schwenk penned the name Modicon.
Stands for "MODular DIgital CONtroller". The concept of putting a
minicomputer on steroids with a rule based "electricians language" caught
on. We called it a PC. Ah, history. 'Tis now called a PLC, courtesy of my
old skiiing buddy, Odo Struger of A-B. Gates won, even then.
The company passed through several hands, finally landing on the deck of
Schneider, from the country that fashioned the Statue of Liberty. We "sold
out" for many reasons. I remember the day when the board suggested that
techies were "a dime a dozen." That was the tip over day. So we agreed to
sell the company. "Selling out" brought capital and professional management
into the company and got rid of the revolutionary, me.
Today, the PLC business has larger revenue than all Hollywood's domestic
business of 8 billion a year. Schneider, our extended family, is also
larger than Hollywood. I am proud of the name and the heritage.
Why am I writing this memo? Over the last year, you tended to lament the
demise of the name "Modicon". Not so, my old friend. The name is a
product line, products are named thus, our email is modicon.com and
communications and software are well known from the generic Modxxx title.
I liken my relationship to Modicon as to my daughter’s marriage. Pat
married Gyt Letourneau. Noble bride cried at the wedding. And smiled.
Our daughter is out of the house, we love her, and the name and family go
on. As it is with Modicon. In the family of Schneider, 'tis well
protected and sheltered. And I still love and grieve for all my children.
Life goes on and the name, for me, continues forever.
I write this in the woods of New Hampshire, and no longer have any legal
connection to Schneider or the Modicon product line, so my heart, not my
wallet, is penning this note.
Your columns, poetry and opinions are great, but please don't forget the
3 March 2002
Visit Dick Morley's Barn
Read Dick Morley's book - The Technology Machine
Aquarium screen savers - P2P ocean views
When you're not using your computer, it can enhance your surroundings as a
beautiful, realistic aquarium - you can even get the sound of bubbles
coming from your PC speakers. At home, our cat sits down to watch the fish
Microsoft XP Plus! has an excellent aquarium screen saver included among
other things. But, you can download excellent aquarium screen savers free -
with varieties of fish, scenery, sounds etc.
Aquatica Waterworlds - 3D fish in multi-dimensional scenery
Now, you can get beyond a single-computer aquarium, to see an ocean
populated with a diverse and abundant ecology. Sea horses float among coral
reefs, schools of fish dart and weave to evade hungry predators; a mother
humpback whale and her calf migrate to cooler waters to feed, etc. Myriad
beautiful autonomous creatures are caught in the web of life that plays out
before your eyes. As a user you are able to build and influence the ecology
of the world, sculpt the surroundings, breed artificial life, or create new
life forms from scratch.
DALiWorld provides artificial life scattered across millions of computers
everywhere, a living global digital Gaia: a virtual ocean distributed
across machines, a community of millions of users all taking part in
building this virtual ocean, creating the ecology and the life forms that
inhabit it; the life forms seamlessly swimming from one machine to the
next. And your PC acts as a co-creator.
The ecology of DALiWorld draws inspiration from the myriad of beautiful
creatures that exist in the real world. You'll see many types of fish,
including Angelfish, Batfish, Butterfly fish, Damsel fish, Groupers,
Leatherjackets (Triggerfish and Filefish), Parrotfish, Surgeonfish, and
Wrasse. And you can click on any of the fish families or species to get to
know the diverse ecology.
DALiWorld Community continues to grow
Our modern society is hooked on growth, an addiction that is difficult to
cure. People get used to extrapolating growth and success, especially when
it works for a while. Then they become part of crony capitalism.
When growth stops many start to fudge, which can quickly turn to lying, and
then extend to cheating. Few people start off being dishonest - most drift
into it through insidious wealth addiction.
It turns out that the recent Enron debacle - the single largest bankruptcy
in history - is only the tip of the iceberg. Off book accounting is not
something that was invented by Enron; it is disingenuous for the press and
congress to present it as an evil that was invented by them. The big
accountants, aided and abetted by large financial institutions,
consistently look for tax and legal loopholes and actively market their
ability to do just that.
This disease, now called 'Enronitis', is endemic in our system. There are
many other companies that have large hidden liabilities off their books a
la Enron. Once Pandora's Box is opened all hell could break loose with
disastrous consequences to our economy.
You make your list of deceitful-accounting candidates. I have my own. Send
me an email.
My new article "Crony Capitalism" has just been published (March 02) by the
popular webzine Spark-online.
Read Crony Capitalism
See the latest issue of the popular webzine Spark Online
After his major debacle in the downfall of Invensys, I had reported that
Allen Yurko has joined Compass, a private-equity firm in the UK. A
knowledgeable UK observer who knows Allen Yurko personally commented:
"Yurko made a complete mess of the Invensys, particularly by firing far too
many people far too quickly. A lot of the problems were self-inflicted. But
Allen refuses to admit his blindness, insisting that his problems were
exacerbated by the economic slowdown.
Regards the praise for Emerson's Delta V during Rick Haythornthwaite's
strategy presentation, Mike Alsup of Emerson [Mike.Alsup@EmersonProcess.com] wrote:
"When I asked Allen what he would do now, he said he would retire to play
golf. But that was BS - at 50, he is too bull-headed to retire. Private
equity firms like Compass have become a retirement home for many executives
who have departed from corporate life. Allen Yurko is probably paying to be
a member of the club, while he waits for his next opportunity. And I'm sure
there is some board somewhere which will be blind enough, or stupid enough,
to hire him."
"I finally got into the archived section and transcribed the full quote
about Emerson's Delta V.
Jim Pinto feedback:
In talking with an insider at Invensys, the clear understanding there is
that Emerson did a major and strategic leapfrog with DeltaV & PlantWeb. He
used a sports metaphor, saying that DeltaV/PlantWeb was conceived and
developed by geniuses, with a coach like Vince Lombardi and a quarterback
like Bart Star. Strategies have given way to tactics, and the halfback
(Emerson sales management) is now running the ball down field.
Rick Haythornthwaite: "One of the things I heard everywhere I went was we were being taken to the
cleaners by Emerson and DeltaV. I think Emerson has done a fantastic job
with DeltaV. But when one looks at what they've done with that, it is less
about functionality, it is more about marketing and approach."
"Invensys is still in denial concerning DeltaV and their failure to keep
pace with technology, but at least they know who the leader is!"
Regarding free downloads of MP3 music, now even more widely spread on P2P
websites like Morpheus, Neil R Brown from Glasgow, Scotland
[firstname.lastname@example.org] remembers history:
"In the 1970s, when cassette recorders became cheap and readily available,
there was a similar fuss about "home taping". Despite the music industry's
bleatings to the contrary, several serious studies into this produced the
same conclusion - those who taped the most also bought the most. When all
you can hear on the radio etc. is the bland stuff dreamed up by the fashion
and marketing industries, nobody with any deeper care will buy. Let people
hear a wide variety of uncontrolled talent and share their interests and
enthusiasm and things can be different.
"Like the technology industries, this seems to go in waves. I am old
enough (50 today!) to recall three waves of rebellion - the Beatles etc. in
1962, hippydom in 1967-8 and punk in 1977. Before that were the original
rockers in the early 1950s. None of these was conceived and initiated by
the industry, though they were quick enough to jump on once the bandwagon
stated rolling. The music industry doesn't like talent - preferring image
and hype the men in suits can control.
"We are way overdue for another rebellion. The Internet is cheap to
broadcast on, worldwide, hard to control, so may provide the way. But, it
will need more than that - people get the music they deserve, so Joe Public
needs to do his bit as well. I for one would like to see more opportunities
for young local bands to play live, pay their dues and learn their trade.
But this needs people to want to hear them. If nothing is feeding into the
bottom end of the chain, all that will come out at the top is the Mariah
Carey's and the like - with the ridiculous $$$ deals and the bland
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