JimPinto.com - Connections for Growth & Success
No. 10 : August 1, 2000
- Baanalysis-3: Invensys+Baan
- ICS Sold - stockholders hold
- All your telephones ring on one number
- Automakers rev up web-based 'build-to-order'
- Hot Book: Funky Business - Talent Makes Capital Dance
Baanalysis : Take-3 - Invensys + Baan
On Tuesday 25 July 00 (the date when it's offer to buy Baan was supposed to lapse) Invensys announced that it was standing by its bid, even though it only controlled about 75 percent of Baan. Invensys previously demanded 95 percent control, but now only required a stake of 50 percent plus one share. The tender period, which expired in July 25, was extended until August 1. So, what will Invensys do with the possible 25% it does not own? Probably find ways to dilute it, before more capital is invested.
Baan had already admitted that the company was in serious trouble and evidently the management (what's left of it) feels that they are better off with Invensys, which will now assume management of the loss-making Dutch company.
See July 26, 2000 News on Yahoo
Can Baan be fixed?
Invensys must first stop the losses and then re-insert growth. They will most likely succeed in the cost reduction plan, but return to growth will be difficult, at best. According to Peter Reilly of Deutsche Bank, who has followed Invensys closely, the ERP market has matured and the new growth markets - Supply Chain Management, Customer Relationship Management etc. - are highly competitive and dominated by much bigger, pure software companies. The market for automation software is indeed growing (at an annual rate of 5% according to ARC) but so is the cost of developing new software. Faced with a lack of internal growth prospects, the proposed purchase of Baan represents a high-risk attempt by Invensys to raise its own growth profile.
Invensys has stated that it intends to have Baan break-even within 12 months. To do this, about 1,000 employees, or about 25% of the workforce, will be made redundant. But, this is only part of the cost-savings - more will have to come from cutting overheads. The tough job will be to maintain morale and avoid loss of key people during what is likely to be an unpleasant period. The more critical short-term issue will be getting Baan to a stage where it is cash neutral.
The acquisition of Baan is indeed high-risk for Invensys. If it turns sour (growth and profit dilution), then Invensys itself becomes an acquisition target.
Get the Invensys press release dated 26 July 00, on this subject
ICS(UK) Stockholders wait for 'white-knight'
The other "company in trouble" mentioned in the last JimPinto.com eNews, is ICS(UK). Alchemy, a bottom feeding "vulture capitalist" with experience in turnarounds and asset-sales, has made a penny-a-share offer, valuing the $ 60-70m company at $ 2.5m. ICS is drowning in debt and apparently the banks support the Alchemy offer. The ICS board is probably a rubber stamp.
A Veep at one major automation competitor says :
"I actually think that the Max system is good, if the parent wasn't so screwed up. The system design is sound (far better than many other DCS systems). It uses 100 megabaud Ethernet for a system bus, supports sequence of events monitoring down to 1 millisecond, has windows NT based HMI, controllers based on windows CE and a very broad range of I/O. Further, the President, Chip Halloran, is a good motivator and perhaps the best salesman in this business. It is too bad the parent sucks! And, we won't touch it with a barge-pole...."
The institutional investors have been bailing out in recent weeks and as of a couple of days ago the main shareholder was Deutsche Asset Management with about 11%. At the same time small investors who see this as a 'penny stock' play. About 20m shares were traded at the end of last week (from a total of about 170m) with a spread of 1.25p to 2p. Clearly some people were selling in the market, but the great majority of small investors seem prepared to wait and see, with the hope that a white knight will come along. The rumor is that 2 American firms might make a joint bid. There is also talk of Swedes taking a look. As always a lot of froth in circumstances like this.
I'm told that Alchemy cannot force the 1p sale until they hold 90% and so far they have less than 10%. The other institutions hold 20% and so far have not sold. Could be an interesting few weeks, while ICS turns slowly in the wind......
a/ Alchemy is the same vulture that wanted to buy Rover (the UK car company) to milk off all the assets - BMW finally bought Rover, with a much better deal for everyone involved.
b/ I hear that Alchemy also owns INSTEM, another small systems-integrator. After firing the hangers-on and selling off the buildings and company-cars, they will likely integrate ICS and INSTEM, and sell the package to one of the majors. Interesting that most of the majors are getting IN to systems, while the minors are starving to death.
c/ After having sold the company "down the river", it's a pity that the board and corporate management will probably retire with high salaries, company cars and a golden parachute. Or, does Alchemy send them to Siberia?
One number - all your phones ring
So, how many telephones do YOU have? One at work, one at home, a cell-phone in your pocket, one in your car? Do you travel a lot? Some cell-phones work well in one part of the world, while some are better in others. Can you imagine your telephone at home, or the one in the office, ringing off the hook while you are somewhere else? Do you wish the right one would ring at the right time?
Well, SIMULRING.COM gives you one phone number that rings all your phones at the same time. The idea is simple - when you sign up, SIMULRING assigns you a number. When somebody calls that number, all your phones ring. Whichever phone you answer takes the call. The cost of the service is $10 per month, more if you want a premium phone number, such as one ending in two zeros.
One SIMULRING number rings ALL your phones. You're never out of range, and you never need to miss a call.
Take a look at the Simulring.com website
Of course, there are times when you wish that the phone would not ring. But, that's another dot.com idea....
Hot Book - Funky Business: Talent makes Capital Dance
The challenge of the new economy is not the Internet, but the ways to make the most intelligent and innovative use of the real capital of the enterprise: TALENT. The authors of this book, Riddersraale and Nordstrom are based at the Stockholm School of Economics. They are talented and consummate showmen, judging from the way they’ve marketed their book, with shaven heads, leather jackets and a state-of-the-art website:
Funky Business is refreshing and takes a real eyes-wide-open look at global business trends from a non-USA perspective. Thank you Marketing guru Walt Boyes, for telling me about this great book!
Go take a look at Funky Business
Automakers rev up web 'build-to-order'
Soon you'll be able to click on BIGTHREEAUTOMAKER.COM, find the model of car you want and start selecting options. With each selection, the website will let you know how much the vehicle will cost. After you've configured the car you want, just the way you want it, and have found a financing plan you can live with, you can click on the "buy" button; BIGTHREEAUTOMAKER.COM will tell you that the vehicle you've designed will be delivered to your house a week from Wednesday. Guaranteed.
Borrowing a page from Dell's e-business playbook, major automakers plan to use the Web to build vehicles to individual customer order - and deliver them fast.
Read the story
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