President-elect Donald Trump was recently able to coax Carrier, one of the operating segments of diversified conglomerate United Technologies Corporation (UTX), to retain some of the jobs at its Indianapolis unit.
On Nov 30, 2016, Zacks Investment Research downgraded renowned diversified operations company Crane Co. (CR) to a Zacks Rank #3 (Hold) from a Zacks Rank #2 (Buy).
General Electric Company (GE) recently sold its shares in GE Capital Interbanca S.p.A, Italy to Banca IFIS S.p.A.
General Electric (GE) unveiled Freelium at Radiological Society of North America (RSNA) 2016.
Activist investors who expect to raise returns by influencing strategic decisions are having a meaningful impact on many industries from consumer-packaged goods to aerospace and defense. And the odds that your company, or industry, may find itself targeted by an activist are going up. Activists launched 159 campaigns in 2015 focused on shareholder value maximization, nearly double the 88 that were launched the year before. If you are a senior executive in a company concerned about activists, you have two potential paths: take the defensive (and perhaps expected) posture of defending your current strategy, or embrace the challenge and reassess your company’s path to value creation. Activists’ interventions are often described, favorably or not depending on your point of view, as slashing and burning, taking out cost, and engaging in financial engineering. But that’s an unfair oversimplification. Many activists are asking some very tough and fundamental strategic questions: Are the company’s investments in the right place? Is the company’s portfolio too diverse? Are there difficult moves that must be made to create a winning strategy? Senior executives should consider these questions carefully, since the rise of corporate activism is unlikely to slow any time soon — either way — these very basic but important strategic questions must be addressed. Simply improving short-term performance by cutting costs across the board isn’t the answer – activists can do that themselves, simply by taking out 10% from your company’s cost baseline. You need to look at costs as strategic investments that ultimately drive growth: which costs, if cut, would actually destroy shareholder value by diminishing growth or competitive advantage? And as an insider with the right perspective and access to granular company data, you can match or exceed what outsiders may be able to offer your investors. Take the time to reassess your company’s path to value creation. You have clearly thought about these strategic questions before, but constraints on your business and short-term issues may have stood in the way of the answers – or at least at looking at the questions as an outsider might, and possibly arriving at different conclusions about the business. Now, you will have to translate your strategic thinking into a value creation plan that your management team and board will embrace. You will have to be clear-minded about such questions as: What are the simple approaches to value creation that have worked in the industry, and do they still apply? What advantage do we have — or can we create — in the market, and how do we maintain and extend this advantage? What is our company great at doing? What is our promise to the market and to customers? What is needed to execute against that promise? Defining your aspirations that way and combining them with the capabilities required to fulfill those aspirations will give your company the best chance to create long-term value … and to address activists’ concerns and capitalize on the opportunities and ideas they bring. For our recent book we studied companies from a broad range of industries that operate this way, including Apple, CEMEX, Danaher, Haier, IKEA, Inditex (known for its Zara apparel business), Starbucks and many others. These companies may do business in a dozen different sectors, but everything they do nonetheless fits together in a coherent way. Apple’s online services, smartphones, and computers, for example, all rely on the same capabilities for design and integration. Starbucks applies its capabilities in talent management and distinctive retailing to everything it does. Danaher designs, manufactures, and markets industrial and consumer products in industries including dental, industrial technologies, environmental, and life science and diagnostics, and has distinguished itself by its outstanding shareholder return and its focus on continual improvement, across all its businesses. When your company has developed that kind of clear identity, you have leverage and insight that other companies –and activist investors –do not have. When investor Carl Icahn wrote to Tim Cook in 2014, with concerns about insufficient cash growth and share undervaluation at Apple, Cook’s response was measured. He eventually did buy back stock and increase shareholder dividends, but his response about television and cars was such that Icahn stated publicly that whatever Tim Cook decided was completely Tim Cook’s decision. Danaher, similarly, has good relationships with activist investors. In fact, the company was formed by Steven and Mitchell Rales, who were corporate raiders and understood the value of coherence from the start. Aetna CEO Mark Bertolini described the positive impact of coherence on stock value: “The magic question is: Are your business fundamentals sound enough so that you can consistently deliver a product to customers that they will continue to buy over time? If people believe your business fundamentals are sustainable, it will move the stock price higher.” Some CEOs might resist this approach: they may feel locked into the constraints given to them, or may simply want to avoid the risk of change — hoping that potential disruption or industry structure changes that activists initiate will leave them unharmed. But we’ve seen that movie over and over, and we know how it ends. The better course is to build a case for your company’s fundamental advantage, and lay out your plans for improving it and driving value creation.
3M Company (MMM) is currently going through a lean patch post third-quarter 2016 earnings, with an average return of 3.8% compared with 7.4% for the Zacks categorized Diversified Operations industry.
We issued an updated research report on Crane Co. (CR) on Nov 29, 2016.
GE Healthcare will launch 25 new products, services and digital solutions at Radiological Society of North America (RSNA) 2016.
Post third-quarter 2016 earnings, United Technologies Corporation (UTX) shares recorded an average return of 7.3% - an inline performance compared with the Zacks categorized Diversified Operations industry.
Shares of Crane Co. (CR) reached a new 52-week high of $76.09 during its trading session on Nov 23. This apex improved upon the last 52-week high of $75.37 on Nov 22.
Compass Diversified Holdings LLC (CODI) recently divested part of its controlling interests in recreational vehicle parts manufacturer, Fox Factory Holding Corp (FOXF).
The Zacks Analyst Blog Highlights: Coca-Cola, Disney, Danaher, Halliburton and Time Warner
On Nov 21, 2016, Zacks Investment Research downgraded Ingersoll-Rand Plc (IR) to a Zacks Rank #3 (Hold).
General Electric (GE) inked an agreement with DILON , under which the latter will become an exclusive distributor of General Electric's Discovery NM750b Molecular Breast Imaging system in North America.
United Technologies Corporation's (UTX) business arm, Pratt & Whitney, has entered into a deal with a popular low-cost Mexican airline company, VivaAerobus.
GE Digital, one of the operating units of industrial goods manufacturer General Electric Company (GE), recently acquired ServiceMax, a premier cloud-based field service management solutions provider.
Did you know the army once tried to replace its mules with camels? Join author Simon Winchester, social-media scholar danah boyd and comedian Chris Gethard for more tales from the natural world, including marine animals that will either live forever or kill you (or both), as well as the wonders of poop soup. The post It’s Alive! TMSIDK Episode 2 appeared first on Freakonomics.
Shares of industrial goods manufacturer Ingersoll-Rand Plc (IR) scaled a new 52-week high of $69.37 on Nov 4.
Two leading airline operators in the People's Republic of China recently selected the V2500 engine to power their Airbus A320ceo family aircraft for superior performances.