Invensys sells Powerware to Eaton - gets new COO

In my opinion, the "deal" is not as good as touted. A good deal for a profitable company in the industrial automation business is a price of 1:1 - price versus revenue. Powerware was sold with a ratio of 0.67. The good deal for Eaton was reflected in the Eaton stock going up (trading around its highest ever).

Invensys debt stood at £3.5 B at its peak. The recent £2.7 B re-financing, plus the new cash from the sale of Powerware, will help reduce debt to £1 B. Haythornthwaite is expected to sell the Hansen Transmissions business and a couple of smaller operations too within a month. But, even after this news, Invensys stock bumped up a bit, and then fell below 20p, with market-cap of just £1.12 B.

Powerware is a leader in uninterrupted power supply systems, and was part of the Invensys Powersystems division which was originally expected to go public separately in 2000. But a sagging stock market stopped that.

Powerware is growing faster than other parts of Eaton's electrical group and this will boost Eaton's overall revenue growth rate. CEO Alex (Sandy) Cutler was also looking at the Rockwell acquisition possibility, but that seems to be stalled. However, Sandy Cutler is still on the lookout for acquisition opportunities, so stay tuned.

Meantime, Siemens is reviewing Invensys' cash-generating rail systems business, and Foxboro - though Invensys still insists that these are not for sale. But that can change quickly at the right price.

Another related, but unrelated, "purely coincidental" event: no sooner had Invensys announced the sale of Powerware to Eaton, than it also announced that Ulf Henriksson of Eaton was joining as COO. Ulf Henriksson was head of Eaton's hydraulic division, and he is expected to drive the Invensys implementation plan. If he does well in the next few months, he will likely become CEO when Rick Haythornthwaite exits.

The recent financing moves seem to have quieted down the moans and groans on the Invensys weblog. Many employees are hopeful that things are indeed improving.

ABB turns profitable after 2 yrs

ABB, has been fighting for survival by selling units and cutting staff to reduce debt and focus on its core automation and power technologies. The company reiterated its 2005 financial targets: average annual revenue growth of 4% in the 2002 to 2005 period, plus a group operating margin of 8% by 2005. The debt level still stands at a whopping $6.7 B, compared with $7.9 B at the end of 2003. ABB lost $767 million in 2003, bringing cumulative losses to more than $2 B over 3 years.

Some analysts expect that sales growth and margin improvements may actually exceed expectations, which will raise the current modest ABB stock price. However, ABB still faces appeals to its $1.2 billion asbestos settlement for liability claims against its former Combustion Engineering unit, with a hearing is set for June 3. ABB appears confident of the settlement.

Focus on the benefits - outsource the tools

Outsourcing is making the tools of productivity cheaper, and so facilitates productivity improvement. My friend, the quintessential marketer Perry Marshall writes:

"I think all the rage about outsourcing is misguided - because if someone is writing software, the larger issue is not how much money you can make by writing it, the question is what can the software do for you after it's written. If you can get it written for 1/10th the price then you can write 10 times as much software and get a lot more done in your business. That's the thing that nobody talks about. And that's where the real opportunities will be for the next 10 years - harnessing that cheap labor and doing economic alchemy with it."

Electronic voting - Diebold eliminated in California

Responding to a raft of reports detailing flaws in electronic voting systems, California Secretary of State Kevin Shelley, who is responsible for certifying all voting machines used for elections within the state of California, announced that he is requiring all electronic voting systems purchased by California counties to provide a paper printout to allow voters to verify their votes and auditors to verify election results.

In his speech announcing the withdrawal of the Diebold electronic voting machines, Shelley warned the company: "Don't try to pull a fast one on the voters of California, because there will be consequences if you do!" He has asked the State attorney general to investigate the company for fraud, since Diebold officials allegedly lied about performance of the ill-fated machines. California has 14,000 machines, and will not pay Diebold unless they are actually used.

This landmark decision on touch screen machines is but one battle in a much larger struggle: America's crucial need to have credible and trustworthy elections in November and beyond.

Between now and November, the voter rolls updating/purging processes being used by the states MUST be opened to non-partisan public scrutiny and non-partisan public approval. Getting that done will require fast action and political muscle with elected officials. The organizations which can get this done, such as Verified Voting, True Majority, and Common Cause, require our commitment and our support.

Editorial - the situation in Iraq is getting worse

Quick - answer this: How many Iraqis (including civilians) have been killed since the start of the war? That number is not publicized much. Answer: 20,000+. Did you know that? Or, will you argue that hey, it is "only 10,000"? The number is still climbing.

The effort to stabilize Iraq is out of control. There seems to be no plan, no strategy. April has already brought the worst death-toll since the war began. A year after "Mission Accomplished", how much longer can this killing continue? And again - what was the reason that this "pre-emptive" war was launched?

At the core, the challenge we face in Iraq is about legitimacy: Iraqis see the US increasingly as an occupying power, not a liberating one. To send a credible message of democracy and transition to self-rule, a truly international coalition is needed. Tom Friedman of the NY Times (whose coverage of the Mid-East has been insightful and prescient) says: "If it is America alone against the Iraqi street, we lose. If it is the world against the Iraqi street, we have a chance."

Our troops in Iraq are stretched thin - many reservists have been serving there for more than a year with no end in sight. US commanders are asking for more troops, and Senate leaders like John McCain share the concern that our current troop levels are inadequate. There's even talk of a draft. How will you feel if your son or daughter is drafted?

After a year in Iraq, one soldier was just getting on the plane to come home when he was ordered to return to duty. Can you imagine how he felt? And his family, who were anxious to see him again? And how they will feel when he is injured, or killed before he has a chance to return? That has already happened.

Did you look at the faces of the 721 soldiers as Ted Koppel read their names on ABC's nightline? Most of "The Fallen" were in their twenties, some still teenagers. Tell their families about our need to get rid of Saddam and WMD and see how they respond.

Somehow, some feel that it is "unpatriotic" to think this way. Some feel that it's not supporting our soldiers who are already there; and not honoring the ones who gave their lives.

I'm not advocating that the US should simply turn and run. But, it's time to face the facts squarely. We must recognize that America, acting alone, is no longer capable of reaching the hearts and minds of Iraqis. We've got to transfer authority over Iraq to the United Nations, to enable a real transition to peaceful Iraqi self-rule. Transferring control to the UN would also enable many other nations to share the logistical and financial burdens of helping Iraq transition to peaceful self-rule.

This is NOT a partisan political issue, or an anti-Bush issue. All Americans are deeply concerned. As they should be!

eFeedback

"Referring to the cheap cost of naturally occurring energy there is a huge hidden cost of preserving the supply of oil. How much a month are we spending in Iraq and how many lives are lost? That's just one component.

"Richard Wargo (eNews 20 April 2004) asserts that when it makes economic sense to convert to alternative fuels, we'll just do it. It will take years to develop the processes and capability to produce alternative fuels and to build distribution systems. I admire his confidence in humanities ability to adapt and survive. But a little advance planning and development work now would go a long way to smoothing the transition whenever it does happen.

"I believe we need to develop alternate sources of energy over the next few years while we extricate ourselves from Iraq and similar situations. I worry that neither political party has a platform that has a long term plan for this. Unless we change the status quo, we face a future of a continual struggle against terrorism while we continue to send our dollars to the Middle East where the terrorists get most of their funding from. We will gradually bleed to death financially.

"Please someone, show me how our future is not this bleak!"

"There are plenty of stupid people around, and there will always be those who believe that it is worthwhile to subvert the system to their own ends. Richard Nixon was considered by many to be extremely intelligent, a patriot, and well suited to be the President. Yet he himself authorized the illegal activities, aimed at subverting the electoral process. And then he subverted the constitution by attempting to cover it up. This led to his eventual downfall. And yes, he did get caught, but at what cost?

"Then there is this: What caused the melt down on Three Mile Island was not a lack of adequate controls, or even a willingly malicious act. It was an operator who unwittingly shut down the one system that would have saved the plant.

"These, then, culminate to the real point of a discussion on eVoting. We ere moving away from a system that is well know. In spite of it's security and protections it is vulnerable, and continues to be vulnerable. But it is inconceivable to believe that the system we are moving towards will not have similar, and very different vulnerabilities, as well as similar and very different pressures on it.

"Going to the 'Everything I need to know I learned from Star Trek' theory, I remember what Scotty said when he prevented the Excelsior from following them out of docking. "Ahy, Captin', the more complicated they make it, the easier it is to stop up the plumbin'..." The difference is, this time, the plumbin' is the US Constitution, the very thing we must hold most dear, and important, if we are to survive as a nation."

"From time to time President Bush has expressed great puzzlement about why so many around the world dislike and distrust him, or have switched to a negative view of the USA. Respected political writers have urged Mr. Bush to come to understand other people and their points of view better. Unfortunately, I think this would be a near-impossible and perhaps even counter-productive task for Mr. Bush to even attempt, as it runs contrary to how he seems to be put together as a person.

"My applying any sort of clinical label to Mr. Bush would be insufficiently informed and unethical. I suggest, however, that he can be partially understood as one whose thinking seems to be powerfully constrained by four basic predispositions:

1. Facts are to be reduced toward simplistic black or white. Shades of gray cause him discomfort, and are best avoided.
2. If he wishes for something to be so, he often comes to believe that it is so.
3. He is by definition good. That which contradicts him or opposes him is, by definition, bad.
4. He cannot, must not, ever, be wrong.

"His behavior consistently suggests that he feels, and even believes, that the world should already understand all of this and not be disturbing him by challenging him. An example: Regardless of whether a given topic is large or small, Mr. Bush typically shows immediate annoyance or anger if confronted with an unwanted fact, or by an opinion with which he doesn't agree. Depending on the occasion, he may or may not attempt to conceal his irritation with a veneer of false joviality. His basic reaction, however, suggests that both complexity and different-ness, per se, are threats to his inner equilibrium.

"Exemplary of (2) above, when he's in the midst of saying something which is self-evidently not so, often one can virtually see him striving to bring himself to actually believe whatever he may be asserting.

"What is often characterized as a lack of curiosity appears to me to be self-protection. Mr. Bush actively avoids the inner dysequilibrium which might be caused by information or experience at odds with his existing perceptions and beliefs, illusory and otherwise. To the extent that I'm correct about this, his internal equilibrium is best preserved by his not attempting to have a real understanding of people with different views and feelings.

"While I would greatly prefer to be wrong about all this, Mr. Bush appears largely limited to trying to read people as best he can, in order to try to manage them. Reading people, however, is a frightening distance away from understanding people."