Here is a bit of recent history: After Jack Welch’s departure in 2001, CEO Jeff Immelt has taken GE stock from $40/share to $6; now it is back up to $16. The decline was largely the result of falling profit at GE Capital, which generated 50% of GE profits before the downturn. Jeff Immelt will have to do something dramatic next.
Jeff Immelt recently stated that America and GE must return to manufacturing roots. He wants to rebalance GE’s portfolio by becoming more ‘industrial’, looking perhaps for Wall Street to value GE stock as an industrial conglomerate, instead of as a financial group.
What comes next? How will this impact GE involvement in the automation business?
Here is my analysis:
The recent GE & Fanuc joint-venture split was clearly NOT an isolated decision. It followed the re-organisation of the PLC and software businesses into separate commercial units, which was not supported by several key people, notably John Pritchard who spent some 30 years at GE Automation in Europe and is now exiting – the first of many.
GE Intelligent Platforms (GE’s automation arm) reports to Charlene Begley, CEO of Enterprise Solutions, a mix of energy and industrial businesses. Charlene is forceful, personable, impatient and likely to survive. She ran GE Automation before moving to transportation and then on to plastics, which she sold to the Saudi’s (SABIC) in May 2007. She was responsible for acquiring Intellution, which many insiders feel was one of the smartest moves GE’s Automation business ever made. Charlene’s pedigree as a GE portfolio manager looks good.
My guess is that GE will create a new industrial division. Where GE will place its automation business is not yet known; but there will be winners and losers.
Will Charlene emerge as a winner running this new unit? Will GE keep automation, or sell it off? Will it try to create a larger automation unit by putting together its automation business with its energy unit?
All these questions will take a few months of deliberation and strategy sessions – probably till the turn of the year. After that, GE will move very quickly, probably emerging as a buyer (or seller) of automation assets in early 2010.
Who else will emerge as potential buyers and sellers?
For sale:
* Rockwell – whether they like it or not.
* Invensys – whether they like it or not. Their pension plan was under-funded, and was a poison-pill for potential buyers.
* Honeywell – the Process Systems Division is likely to be divested by a hungry-for-growth-and-glory CEO Dave Cote.
Other buyers:
* ABB – Joe Hogan (ex-GE) would find GE’s Automation business too small. He is more likely to be focused on Rockwell. ABB has the cash, and Joe Hogan needs to make a move. A bigger ABB would create a global alternative to Siemens.
* Siemens, the largest industrial company, has never been able to make a successful acquisition. They will be in the bidding.
* Schneider – one of the winners during this decade. They could want GE’s software business to add to Citect. They may also be in the market for DCS player. Invensys would be a good fit and make Schneider a world player in software and process control.
Stay tuned as the automation business re-groups for a new round of mergers and acquisitions.
The multipurpose gadget in my pocket
Here is a personal quiz: What gadget do I carry in my pocket that does any and all of the following?
* Browse the web – Google Search, Youtube videos.
* Read and send e-mail.
* Provide Google maps, with directions.
* Listen to MP3 music.
* Watch movies and videos.
* Play Blackjack, Solitaire, Sudoku and poker.
* Listen to news on ABC and NPR.
* Read CNN, TIME Magazine.
* Display up-to-date stockmarket summaries.
* Read Kindle books and magazines.
* Take photos and videos with a 3,1 megapixel camera.
* Play musical instruments – piano, trumpet, saxophone and ukulele.
* Read Word, Powerpoint, Excel and pdf files.
* Show photos from my Hawaii and Greece holiday trips.
* Accurate compass and direction finder.
* Receive and make phone calls and text-messages.
Yes, you guessed right – after resisting the urge for too long, Jimmy the Geek finally broke down and got an iPhone. I have gotta tell you, I have had it for about a month now and I am enjoying it.
The keys to my enjoyment are the thousands of Apps that can be downloaded easily. Most of the items I listed are FREE downloads, though some cost $0,99 and a few $1,99. When you browse the Apps through a word-search, there are brief descriptions and screen shots, which makes getting the freebies addictive.
My iPhone provides hours of entertainment for me, as well as for my grandkid. iBeer fills the screen with a choice of beers or mouthwash, and the burp (or gargling) when you finish causes loud laughter; the hilarity and screams increased till I finally took it away.
Apple has sold over 30 million iPhones and iTouch (the version without a phone). There are now more than 25 000 applications available for download, including 6000 games by 50 000 developers, with more than 1 billion downloads.
One wonders how this personal multipurpose gadget trend will continue to develop. It is getting exciting for us consumers. Stay tuned.
Jim Pinto is an industry analyst and commentator, writer, technology futurist and angel investor. His popular e-mail newsletter, JimPinto.com eNews, is widely read (with direct circulation of about 7000 and web-readership of two to three times that number). His areas of interest are technology futures, marketing and business strategies for a fast-changing environment, and industrial automation with a slant towards technology trends.
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