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Can Johnson Controls Find Its Footing?


Johnson Controls seems unable to clearly define their business model. In October they released the car seat manufacturing segment of their business, making them less dependent on the cyclicality of the auto industry. The move made sense, given the fact that their other operating units revolve around increasing building efficiency and implementing security systems. It would seem that after their lackluster historical performance they are refocusing their business model. Johnson Controls also merged with Tyco in order to create cost synergies and add to top and bottom line. Johnson Controls does still operate their car battery segment, which is the largest manufacturer of car batteries in the world. Although automotive, it is less cyclical as demand comes from new and current car owners.


All these changes have occurred in a relatively short period of time and following a period of poor company performance. This could serve as an inflection point for the struggling company, inorganically increasing revenue while realizing significant cost savings. It is difficult to say how effectively management will be able to capitalize on the recent changes, however the value that could be unlocked from an effective turnaround is worth monitoring closely.

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