Thursday, August 01, 2002

"Tech Recovery Under Way" Interesting piece in the San Jose Mercury News, making the case that we've certainly bottomed and the tech recovery is underway. Spending on infotech equipment has been up the last two quarters, and the folks who -- it now turns out correctly -- told us that the recession began last March are telling us that the recovery is really well under way: The reason so many economists missed the recession, said ECRI director Anirvan Banerji, is that they base their estimates on how the economy behaved in the past. When the economy begins to change, the past does not help predicting what will happen in the future [emphasis mine]. That's why many conventional economic models lead to exaggerated estimates of growth when the slowdown starts. At the same time, it also leads to undue pessimism when the economy begins to improve. And that's what's happening again. Too many pessimistic forecasts are missing the sustained, although subdued, recovery and are worrying about a ``double-dip'' recession this year. ``We don't see a recession in sight,'' Banerji said. A more interesting part of this pieec at the end, which talks about the importance of good information gatheirng and analysis in decoding the state of the economy and determining what policy is most appropriate: She has urged Congress to spend more money on improving the government's gathering of economic statistics.  The Federal Reserve would have undoubtedly cut interest rates sooner to stimulate the economy and the federal government might have started spending sooner, if they had more accurate data, she said. I've been doing reading around the topic of Business Intelligence lately. BI software allows users to relatively easily sort through huge quantities of data to discover trends and patterns. I"'e likened the technology to spreadsheets, characterizing BI as a 'what-if' tool for non-financial data. You can, for example, see trends along a variety of axis -- or dimensions as they are called -- at once. How are these products selling in these locations in these time periods, and how have those sales reacted to price differences? My reading hasn't yet revealed whether or not there is easy technology that allows one to do forecasting based on those numbers -- whether one can run the trends and patterns data pulled from a BI application into a spreadsheet environment to extrapolate and play 'what-if' games with the variables. The point here is that the economy is now so huge, seems to change so quickly, and is so much more measurable than it has ever been before, that our tools for collecting and analyzing that data -- and informing our reactions to it -- have to keep up if we're going to be competitive as a nation. We expect our companies to be competitive globally, and for that they require great information systems. Why doesn't our country have the same tools?   11:40:01 AM    Something to add? Click here []

	Wednesday, July 31, 2002

Perspectives on the GDP report GDP for last quarter came out today at 1.1%, half the expected 2.2% and much lower than the first quarter's revised 5.0%. a few thoughts: But "looking forward, it's already in the cards for the third quarter that you're going to see a re-acceleration of growth. And the reason is consumption was up sharply in June and the retail sales look strong for July." Mickey Levy Chief economist, Bank of America in New York The weaknesses primarily came from the estimates for inventories and net exports. The June data were not available for these series and are subject to revisions when the actual numbers are available. Fortunately, consumer spending and capital expenditures, the main thrusts of economic growth, grew as expected. Undoubtedly, the stock market has had a dampening effect on consumer and business spending, but the overall trajectory of economic growth should not change materially. Sung Won Sohn Chief economist, Wells Fargo Co. The second-quarter number of 1.1% is a little misleading because we lost 1.8% on trade. Without that, you would've been at 2.9%, which would've been pretty darn good for the quarter." "The loss on trade was that 24% jump in imports, which may be because of fear of a longshoremen's strike. ... The argument was that people were bringing stuff in ahead of time because they were a little scared they wouldn't be able to get anything later." David Wyss Chief economist, Standard & Poor's in New York     5:54:22 PM    Something to add? Click here []

Wireless Data Gets a Business Model The AT&T announcement today is interesting. I've been finding Sprint's advertising -- positioning their business information service through mobile data as a way of keeping the customer contact part of your company up to date -- compelling. It's the enterprise version of the consumer 'last mile' equation in broadband: Getting actionable data into the hands of folks at the front line (customer contact) of business. Combine that with the business intelligence research I've been doing, and you start finding ways for corporations to put key information in the right hands at the right time, you may just have a real driver for both mobile data and the back end infrastructure to support (and, of course, secure) it. Add to that this wonderful quote: "Carriers are growing increasingly receptive to Microsoft, he said, as the cash-strapped companies learn that building their own software services is proving to be very expensive." As a smart friend put it, 'if it were easy someone smarter would have done it three years ago'. Or, how do you say "OS' are really hard" in Swedish? MS/INTC mobile platform initiative is doing an end run around the MOT/NOK/ERIC handset oligopoly. Carriers want cheaper phones to improve margins, and ways to make very high margin mobile data access compelling to consumers. Much industry chatter has focused on MSFT 'failure' to enlist either the big handset licencors or manufacturers (with exception of Samsung) to adopt MSFT/INTC platform. But global electronics manufacturing (SCI, FLEX, etc) would love new products to snap together -- MSFT/INTC wireless reference platform provides that, obviating the MOT/NOK/ERIC play. Color, big screens, compelling mobile data services (more on consumer side) and sensible pricing are the drivers from consumer side. W/high margins, sensible pricing from at least one of the super-competitive carriers will happen (Sprint is very smart now, AT&T very very bad pricing model), and be quickly followed by the others. Imagine, a segment where MSFT is providing innovation, true competition and driving prices lower for all players.     2:11:46 PM    Something to add? Click here []

	Tuesday, July 23, 2002

A name for the market's problem: Will we trade to zero? This is a good one: Unsustainable downside momentum. That unsustainable part is, of course, my favorite. The rest from RealMoney.com Take a step back and think about what the world will look like on the last trading day of August 2002.  Will prices of the best-known companies and stock index futures have fallen to zero? Will equity markets have disappeared? Will the futures markets that depend on the cash equity indices evaporate in tandem? No. But that's what the current pace of decline -- the panic -- in the September S&P futures (SPU2:CME) implies. And that pace of descent is unsustainable. Here's what I mean. The September S&Ps have tanked 28 points on average in each of the past three sessions. Measured from Monday's closing price of 819.80, if the S&Ps were to continue tanking at that pace, they would trade to zero in just 29 sessions. By Sept. 2, the first trading day of the month, the S&Ps would be trading at zero. The capital markets as we know them, and all of the value tied up in them, would be gone. Of course, markets don't go straight in one direction forever. But the pace of the recent decline is providing an example of unsustainable downside momentum. It is extremely unlikely that the financial world as we know it will have vanished by trading to zero by the beginning of September. 3:01:17 PM    Something to add? Click here []

	Sunday, July 14, 2002

Software stealing $ from hardware From a soundview securities report on PC sales trends: Microsoft may have added significantly to the PC hardware sales weakness, as IT managers (and MSFT’s sales people) have struggled to understand, and fund, Microsoft’s new software licensing contracts. If this is the case, PC hardware sales to businesses could improve materially after the July 31 deadline passes. 9:09:49 PM    Something to add? Click here []

	Friday, July 12, 2002

The Big get Bigger Is this an economic or a biological rule? From a piece in Forbes on a Merrill Lynch report about where resumed technology spending will go: Still, even in this tough environment one company is unwilling to discount the pricing of its products--Microsoft. The world's largest software company ranked dead last both domestically and internationally for its flexibility in pricing. But that isn't affecting its importance to customers. The company ranked first domestically in terms of being a key software provider over the next five years. This is truely amazing. It's not hard to argue that Microsoft is facing more competition than it has since Windows 95 debuted nearly 7 years ago. And still they have that kind of pricing power, when companies are installing Linux Servers and even desktops all over the place? Other interesting news from the report is that, yes Virginia, folks will actually start spending on IT again. And when do American IT executives expect their software spending will accelerate? The majority, 43%, said it will happen in the second half of this year, while 28% indicated the first half of 2003 and 24% said the second half of 2003 or even 2004. Internationally, 55% said spending would not pick up until the first half of 2003 at the earliest.   2:41:13 PM    Something to add? Click here []

© Copyright 2002 Christopher Mascis. Last update: 11/15/2002; 11:20:09 AM.