Comment: Journey Into Financial Space!

by Guy Kewney | posted on 05 February 2003

Telcos have no money. Everybody knows this. So I'm more than usually pissed off with Bill Gates.

Guy Kewney

This has nothing at all to do with the rotten time I've had over the weekend with a networking configuration problem; I don't blame Bill for the complexity of life.

Nor am I going to do yet another rant about Slam. The issue of people who run SQL Server and don't apply patches or operate firewalls really can't be described as a problem caused by Redmond - even though a lot of people think it is. No; this is personal.

The thing is, we columnists are supposed to be respected pundits. So when one of us points out, calmly and rationally, that the days when stocks and shares could be expected to rise in value are over, you would be inclined to hope that people who read this (and they do, you do) would go around saying: "You know, he's right ... "

It's been five years now that I've been banging on about stocks and shares - that it is utterly irrational to believe that share prices can simply rise in value without limit. And it's also been another two years of pointing out that while there is a bottom limit to which shares can fall, we aren't anywhere near there.

In the UK, the stock market index, the FTSE, will certainly go below 3000 before it stabilises; I don't know any City analyst who won't admit this, in private. I can't even promise it won't go below 2000; I think it could. And in particular, technology is no longer a treacle well from which sticky stuff can be infinitely mined.

The fact is, as you could tell if you asked anybody who does business with any of the IT and telco giants, they have no money to invest in growth. Therefore, there will be no growth.

Of course, they still have some internal budgets. Companies like Brightstar, the bit of BT that grows new companies, using research done in the old Martlesham Heath research centre, are able to launch new companies - see Microwave Photonics, for example.

Nonetheless, last week, a friend chirpily accepted a salary that was well below expectations when he was headhunted. He was expecting 50K a year; they offered him 40K. He took it - because they are offering him stock options. Why? Can't he read a calendar? This is not 1995! The stock options are worth the paper they are printed on. By all means accept them, but not instead of salary.

As I remarked before, it's perfectly feasible to expect a small recovery in PC sales, for example; they're unfeasibly low. But the "technology sector" isn't going to boom. It's not a procession, any more. It's a race - and your chance of succeeding is no longer just a question of booking your seat on the gravy train; you have to win!

What makes it Bill's fault? Easy. All the pundits in the world pointing this out seems to have had no effect. But now Bill Gates finally admits that technology stocks aren't magic; and suddenly, all the stock markets plunge. Like, it was a secret before?

Oh, sure, it's not Bill's fault that he has credibility, and pundits don't. That doesn't matter. Resentment is what matters: and I'll get you for this, Bill ... just as soon as my fairy stocks vest. Or maybe, when someone starts a futures market in them. Interested? Or maybe this handful of magic beans? Guaranteed to grow up and up and up?