Tech Revival Fueled by Sales to Government

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More on the lack of true demand from the corporate sector:

“The recent pickup in spending on networking equipment – the routers and switches that move information across the Internet and private networks – may be less impressive than it first appears.

In the last few months, Cisco Systems and other networking companies have reported big gains in their sales and profits, fueling a revival in technology stocks. But government spending has accounted for a substantial share of the growth, not corporate investment, according to stock analysts and the companies themselves.

And the growth in government technology spending is leveling off. The president’s proposed budget for the 2005 fiscal year projects technology spending at $59.8 billion, a rise of 1 percent from 2004. So only an increase in corporate technology spending can generate the growth that investors in Cisco and other networking companies appear to be expecting.

In the last six months, Cisco’s sales to the federal government have grown more than twice as fast as its sales to private companies . . .”

Source:
Tech Revival Fueled by Sales to Government
Alex Berenson
NYTimes , March 2, 2004

http://www.nytimes.com/2004/03/02/business/02place.html

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I’ve been meaning to follow up on a terrific article from the WSJ last week, titled Why Analysts Aren’t Sure The Bubble Has Fully Burst. The “Three Bubbles” graphic accompanying the article is simply a gorgeous instrument of communication (its here Three Bubbles PDF). E.S. Browning does an admirable job soliciting a variety of viewpoints…Read More

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What Will Determine the Outcome of the 2004 Election

Simple analysis: the 2004 Presidential election will turn on economic issues — notably, jobs.

Complex analysis: While a number of other issues will continue to get media play — the Iraq situation, the National Guard story, Gay Marriage — I’m not convinced that these are outcome determinative. They will very likely reinforce partisan views, perhaps moblilize one side or the other. They may impact some (but not many) swing voters. Perhaps the negative issues softens up the incumbent up a bit, and distracts his team from pursuing their own media agenda.

But none of these are unequivocably conclusive.

Tactical considerations aside, these are not the strategic issues (and I’m all about strategy) which will swing an election. More likely, these issues offset to some degree the awesome advantage incumbency gives a sitting President. But I remain unconvinced they will swing the election.

On the other hand: Two charts demonstrate where Presidential vulnerability lay. The first, from Thursday’s WSJ, shows the increasing job losses in rust belt state Ohio. As much as the Dems would like to blame this on W., its part of a longer term trend going back decades. The past few years do look particularly awful, however:

wsj_kerry_fights_on_two_fronts.gif
Source: WSJ

This is not the chart which will swing the election. Manufacturing jobs have been leaving the Mid-West for a long, long time. And while it probably is not a good election strategy to say, “Hey, that’s global trade for ya!” — just ask Greg Mankiw — this is by no means a new phenomena.

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