It’s a company that now makes, well, pretty much everything. But for people of a certain age, 3M will forever be associated with the floppy discs which were ubiquitous in the early 1990s.
Now this sprawling organisation, which has more than 60,000 lines in its portfolio, has warned that its products are “ageing” and set out plans to turn back the clock.
In an earnings call, William M. Brown, Chief Executive Officer, said: “The number of and revenue from new product introductions has steadily declined over the past decade. The simple fact is that our products are ageing. While we've been shifting our portfolio toward higher growth markets like auto electrification, industrial automation, data centres and semis, climate tech, and others, these efforts aren't material enough today to offset erosion in our core.”
Brown, who is just 90 days into the job, warned that “organic growth has been below market indices and peers over several years and up only about 1% year to date” but insisted 3M was still an “innovation-driven company” capable of delivering the big ideas to keep it fit, young and growing.
“Driving sustained organic growth requires both getting more out of R&D, as well as improving commercial excellence,” Brown continued.
“Technology differentiation is the lifeblood of how we compete,” he added. “So I'll be looking hard at businesses where we can bring technology differentiation into the business and provide value to customers that's different than our competitors. And I contrast that with commodity-like businesses that perhaps don't really fit so well.”
In the second quarter of 2024, 3M recorded sales of $6 billion, operating margins of 21.6%, earnings per share of $1.93, and free cash flow of $1.2 billion to deliver adjusted organic growth of 1.2%.
Although people who are getting on a bit will always associate 3M with its floppy discs, younger folks will probably think of its N95 masks or Post-it notes.
Back in 1995, 3M’s magnetic media business was worth $2.3 billion. Yet by the end of that year, 3M had sold the wing which made floppies and other now-retro products - later describing it as a “wrenching decision.”
That choice turned out to be wise. A decade later, cassettes, videotapes, floppy discs and other products 3M once made were all starting to slump into obsolescence - and the firm had neatly dodged a bullet.
Today, the floppys of many tech workers' youth are nothing but a memory, with the 3M brand logo conjuring up a warm nostalgia for a lost age when one megabyte was all you needed.
“The floppy disks that I and other elder millennials associate with a company that was essential to our youthful computing experience are long gone, shuttled away as a non-core business for a giant corporation that is best described as an amalgamation of non-core businesses loosely held together by a logo and backing in chemistry and raw materials,” explains a blog published by the Institute of Electrical and Electronics Engineers.
The most common formats were the 8-inch, 5¼-inch, and 3½-inch floppy disks. The 3.5-inch floppy disk, which became the standard in the 1980s and 1990s, initially had a storage capacity of 720 KB. This capacity was later expanded to 1.44 megabytes (MB) using double-sided, high-density disks before we hit the big time with 2.88 MB.
