Quite a Coup for the New ITT
Addition by subtractions is paying off for the refocused industrial specialist, writes MoneyShow.com senior editor Igor Greenwald.
“Telephones, hotels, insurance—it’s all the same. If you know the numbers inside out, you know the company inside out.”
That’s a quote attributed to Harold Geneen, the businessman who built ITT (ITT) into a global conglomerate during the 1960s. That was back in the day when spreadsheets were going to safeguard the Pax Americana, and when they failed, the CIA was ready to step in, subverting democracy in Brazil and Chile for ITT’s benefit.
Only it turned out that even if you knew the numbers inside out, investors were confused by the complexity, and understandably suspicious that you were hiding something. Also, as the Pax Americana slowly crumbled, it turned out that all the different businesses were hamstrung by a centralized corporate bureaucracy, robbed of their hunger and drive.
These days, the few surviving conglomerates like General Electric (GE) are relics of a management philosophy that’s fallen out of fashion. Corporate breakups are now all the rage. Earlier this week, I wrote about Tyco International’s (TYC) plan to split (for a second time) into three separate companies.
And if anyone was looking for a demonstration of the merits of such subdivision, the results delivered Wednesday by the rump of the old ITT should suffice.
The new ITT is now tied to “telephone and telegraph” only by its industrial connectors business, which makes telecom parts and other electronics among its bewildering array of widgets.