Yo Ho Ho: Reduce Software Piracy - and Save Big Bucks

on Thursday, January 31, 2008

The Business Software Alliance has long been on the case of U.S. companies who use, inadvertently or not, unlicensed software for their business operations. Make no mistake, the BSA has aggressively gone after and imposed heavy fines on companies who are caught in the act using pirated software.

It's not hard to catch a software thief -- all it takes is one disgruntled IT employee who knows that the latest batch of Microsoft Office software was . . . ummhh . . . tainted. One dime dropped to the BSA and the manhunt is on.

This week, the BSA is adopting a softer, gentler tone. It's touting a study from International Data Corporation that says reducing software piracy in the United States by just 10 percentage points over the next four years could generate more than 32,000 new jobs, $41 billion in economic growth, and $7 billion in tax revenues above current projections. And it's not just the U.S. While the United States has much to gain from reducing illegal software, high-piracy emerging economies like China, Russia and India could experience even more dramatic, positive impacts, the IDC study suggests.

The study, commissioned by BSA says that the information technology industry is already a major contributor to the American economy. In 2007, the United States spent nearly $458 billion on IT goods and services including computers, peripherals, network equipment, packaged software and IT services. That spending accounted for 3.4 percent of gross domestic product (GDP), supported more than 314,000 IT companies with 2.9 million IT industry employees, and helped generate $485 billion in IT-related taxes.

Yet the IT sector’s contribution to the US economy would be even greater if America’s 21 percent PC software piracy rate could be lowered to 11 percent by 2011, the study said. Such an improvement would add highly skilled jobs to the labor force, support the creation of new companies, lower business risks, and fund government services without a tax increase.
Moreover, reducing software piracy has a "multiplier effect."

According to IDC, for every $1 spent on legitimate packaged software, an additional $1.25 is spent on related services from local vendors such as installing the software, training personnel, and providing maintenance services.

"When countries take steps to reduce software piracy, everyone benefits," said Robert Holleyman, president and CEO of BSA. "With more and better job opportunities, a stronger, more secure business environment, and greater economic contributions from the already robust IT sector, reducing software piracy would deliver tangible benefits for governments and local economies."

The study also reveals big changes in the global IT landscape that could result from piracy reductions in emerging economies.

For example, a 10 percent reduction in China’s 82 percent PC software piracy rate could make that nation’s IT workforce the largest in the world within four years, surpassing the number of IT workers in the United States. The number of IT jobs in China would grow by an additional 355,000 beyond those already projected, bringing the total number of IT jobs in China to almost 3.5 million by 2011. The improvement could increase IT spending growth from 10.3 percent a year to 13.7 percent between 2008 and 2011.

Likewise, a 10 percent cut in Russia’s 80 percent PC software piracy rate could help make the Russian IT sector larger than India’s within four years, putting it among the top three fastest-growing IT markets in the world. By 2011, with reduced software piracy, Russia’s IT sector would be a $33.9 billion industry, compared to $32.2 billion in India without a cut in piracy and $33.7 billion with a cut in piracy. Russia’s IT sector would see annual growth in spending rise from 14.6 percent to 18.2 percent between 2008 and 2011 with a 10 point cut in piracy, with 20.2 percent growth for India and 21.4 percent for Kazakhstan (both with a 10 point piracy reduction).

Appealing to a CEO's better, fairer instincts -- specifically, his or her companies' bottom line, is a new tactic for the BSA. But in a tough economic environment, perhaps this pirate pitch won't fall on deaf ears.
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Stagflation Smothering U.S. Businesses?

on Wednesday, January 30, 2008

It didn't take long for the Federal Reserve to act after this morning's announcement that last quarter's Gross Domestic Product (GDP) number - the key index in measuring the health of the U.S. economy -- was a lousy one.

For the quarter, GDP clocked in at a meager 0.6% - about one percent lower than most economists had anticipated. Market watchers say that businesses really put the breaks on spending during the last three months of 2007. Consumers did, too, but not as aggressively as U.S. businesses.

The low number set off a chain reaction of anxiety and disgust over the economic picture the U.S. is staring at. The low GDP number was bad enough. What may be worse down the line is the signal that inflation -- in the form of rising prices for things like oil, energy, health care, and even widgets and washing machines -- are rising. Normally, the Federal Reserve's decision to cut rates by another half-point, which was announced this afternoon, would be a welcome balm for a weakening economy. But with inflation on the rise, can the Fed afford to cut prime lending rates, send more money back into the economy, and force inflation up even higher?

It's a dichotomy that economists have long wrestled with. Rising inflation in a weak economy is known as "stagflation" and is viewed by economists with the same enthusiasm a disoriented vampire greets daylight.

So far, the Federal Reserve hasn't blinked in the face of recession.

In fact, it signaled that further rate cuts were possible.

Only last week, the Fed announced a surprise three-quarter-point cut which drove its key lending rate down to 3.5 percent. It was the largest reduction in this rate in more than two decades and the first change in the funds rate between meetings since the immediate aftermath of the September 2001 terrorist attacks.

Says Reuters today, "Many analysts believed the Fed would quickly follow last week's aggressive move with a cut of at least a half- point at its first regular meeting of the new year. That view gained support on Wednesday hours before the Fed announcement, when the government reported that the total economy slowed to a barely discernible 0.6 percent growth rate in the final three months of last year."

That's a pretty depressing read. The good news is that some economists, as reported by Reuters, said they "were still looking for just a quarter-point move by the Fed because other reports show the economy appears to be skirting a full-blown recession."

For U.S. companies, some solace can be taken by yesterday's 5.2% hike in manufacturing sales, especially for heavy equipment, aircraft, computers, servers and other big ticket items. It was the largest manufacturing sales increase in five months, according to the U.S.
Commerce Department.

Concludes Reuters, "Whatever the Fed does Thursday, analysts said that further rate cuts are likely until the central bank is sure that the economy is back on sound footing. Bernanke pledged in a speech on Jan. 10 to take decisive action to combat a slowdown. Many economists believe the funds rate could fall to 2.5 percent before the Fed stops easing."
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Key Manufacturing Number Up

on Tuesday, January 29, 2008

Pundits and media types hoping and pleading for a recession will be disappointed today.

Instead of more bad news they could use to help wave their recessionary pom-poms, the media got a sharp stick in the eye in the form of strong manufacturing numbers.

According to the U.S. Commerce Department, orders to factories for big-ticket manufactured goods climbed in December by the largest number since late summer, 2007.

The 5.2 percent increase in orders was a surprise finish for the manufacturing sector for 2007 -- and a welcome message to a segment of the economy many "experts" had predicted would have a lousy year in 2008. Maybe that will happen and maybe not. But from where I sit, an uptick in manufacturing numbers at year-end - a notorious cost-tightening time for businesses waiting for a new year and a new company budget -- is a harbinger of good news for the U.S. economy in 2008.

Some analysts say the big uptick is due to increased demand for mega-machines like commercial aircraft. But even excluding the transportation sector, orders posted a solid 2.6 percent gain for the month. Strong gains were also reported in demand for fabricated metal products, machinery, computers and communications equipment.

That has led some economic gurus to re-assess the current economic picture. Says the Associated Press:

"The December orders increase was more than double what had been expected. Analysts were looking for a much weaker performance, given that a key gauge of manufacturing activity had fallen to the weakest reading since April 2003. The Institute for Supply Management manufacturing index dipped to 47.7 for December. Any reading below 50 is considered recession territory for manufacturing."

I'm not saying that the economy is out of the woods or even that the manufacturing sector is poised for long-term growth. After all, 5.2% is a good number but it's only one number out of 12. And overall, 2007 wasn't a banner year for manufacturers. Orders for the year grew by just 0.97 percent following much bigger increases of 6.31 percent in 2006 and 9.45 percent in 2005. It was the sector's worst performance since orders fell by 3.17 percent in 2002, a year when the economy was just getting to its feet after the 2001 recession.

And there are surely no shortage of skeptics who see the December number as an aberration. Ian Shepherdson, chief U.S. economist for High Frequency Economics, told the AP predicted that manufacturing sector performance in 2008 will likely "turn rapidly south" as the slowdown depresses manufacturing activity.

But the December number may not be an aberration. Another key economic index - non-defense capital goods excluding aircraft - grew by 4.4 percent in December, the first hike in four months and the largest increase since last March.

If businesses keep spending money on big-ticket items in manufacturing, as indicated by the December '07 numbers, and by the advance in high technology products, as measured by the better-than-expected quarterly earnings numbers announced recently by IBM and Microsoft, then a recession is unlikely, or at least tepid if one does arise.

On Wednesday, we'll get a clearer picture. According to the AP, the government will issue its first look Wednesday at the overall economy's performance for the final three months of 2007. Many economists believe that will show the gross domestic product (GDP) was rising at an anemic 1.2 percent annual rate in the October-December quarter, a significant slowdown from the 4.9 percent growth rate of the July-September period.

As I said, not out of the woods yet. But hope, at least in the manufacturing sector, does spring eternal.
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In a Bear Market, Source One offers these 10 Simple Ways to Reduce Spend

on Monday, January 28, 2008

From a recent Source One Press Release.....

Amidst a slowing business climate, creeping inflation and growing fears of a U.S. recession, strategic sourcing expert Steve Belli of Source One Management Services, LLC offers up more than your average belt-tightening advice.

"Many business owners and managers forget that one dollar in strategic sourcing savings goes directly to your bottom line. In hard economic times like these, it's important to remember that it would take $10 in sales to make that same dollar," comments Belli. More than simply cutting costs, strategic sourcing involves a streamlined process that taps into the skills of the supply industry to optimize sustainable competitive advantage for the business and its customers.

Yet, most mid-sized companies lack the resources, disciplined sourcing practices, category expertise and spending power to negotiate and maintain competitive supply chains, according to the Aberdeen Group benchmark report, Strategic Sourcing in the Mid-Market Benchmark.

Aberdeen estimates that such deficiencies cost mid-sized firms in the U.S. $134 billion a year in missed supply savings opportunities. In light of international concern over a long-term U.S. recession, the time couldn't be better for more refreshing approaches to cutting costs.

With these 10 quick tips on how company decision makers can benefit from strategic sourcing without losing finance and purchasing management support, Steve Belli offers invaluable advice on recession-proofing your bottom line.

Source One offers the following 10 steps to cut costs in tough economic times:
  1. Creativity is the golden rule in every aspect of your approach-- including the identification and qualification of suppliers, the geographical and logistical aspects of the supplier and company's clients, the sourcing strategy, and the development and negotiation of contracts.
  2. Collecting data saves dollars: In order to maximize savings, learn how to study up on (less obvious) aspects of the market. Note: Strategic Sourcing consultants, like Source One, have access to data and information that most companies cannot afford to acquire for every one of their strategic and non-strategic spends.
  3. Examining (or re-examining) your sourcing strategy can be eye-opening: At the rate the current market changes, it is essential to stay on your toes and constantly reassess your strategy. Be realistic about your requirements by looking at your minimum needs and maximum desires.
  4. Developing a supplier list always adds value: Have you accumulated a large potential supplier base? Doing so will increase the likelihood of unearthing original opportunity and savings!
  5. The ABC's of RFPs : Open communication is key (and ultimately saves you money) throughout the Request for Proposals (RFP) process.
  6. Analyzing response can be the missing link: Turn to a fact-based objective market picture and plan from there.
  7. Only fools rush in. Negotiating issues carefully saves money. From both a qualitative and quantitative aspect, gauge each supplier proposal against your internal benchmark.
  8. Planning and implementing = results in action.
  9. Continuous performance management will ensure you savings (and keep your suppliers on their toes.)
  10. Watching your back keeps you moving forward. Take a careful look at what your competitors are doing in terms of source and supply.
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Price Promotions Not a Quick Fix, Marketing Guru Says

on Friday, January 25, 2008

It's no secret that in tough economic times, companies will do whatever it takes to keep sales rolling in - even slashing prices if they have to.

But one marketing industry observer says that's a loss leader for anxious CEO's.
Some companies may not be getting the message that "if value is driven only by price, price becomes the only value proposition you have," said Chakravarthi Narasimhan, a marketing professor at the Olin Business School at Washington University in St. Louis, "managers can be overly focused on losing market share and get caught up in a mindless cycle of discounting - without regard to the long-term implications of their actions."

Take automobile manufacturers, for example.

Dealers want to move more vehicles. In response, manufacturers initiate price promotions, offer rebates and lower buyers' financing costs. "The additional volume that comes from these promotions will slowly fall," Narasimhan said. "Why? In the mind of the consumer, there's always another promotion and no real pressure to buy at a particular time. This dynamic, in turn, leads companies to continue price promotions.

"Strategic consumers are those who form expectations about future prices," he explained. In other words, they anticipate that certain products fluctuate in price and react in one of several ways.

It's no different in the consumer food market. Narasimhan and fellow researchers Tat Chan, associate professor of marketing, and Qin Zhang, assistant professor of marketing at the University of Texas at Dallas, examined A.C. Nielsen scanner panel data to compute the canned tuna purchases of 1,000 randomly selected households in Sioux Falls, S.D., during a 123-week period. Their study focused on 6.5-ounce cans and included StarKist, Chicken of the Sea, 3 Diamonds, private-label and other brands.

They proposed "a dynamic structural model to understand the impact of temporary price promotions on households' behavior and determine the amount of consumption increase, brand switching and stockpiling."

Sorry, Charlie. Although some consumers switched brands to take advantage of any sale, loyal customers stocked up on their preferred brand when its price was reduced. A price cut caused light users to increase their consumption of canned tuna, but heavy users stored cans. Narasimhan, Chan and Zhang found price promotions could hurt large-share brand profits in the long run. An increase in sales at a lower price frequently came at the expense of future sales at the full price. Similar conclusions were drawn when the researchers looked at data from the paper towels category.

The takeaway? Managers can use these findings to develop more effective pricing and promotion strategies. They must keep in mind customers vary in their needs, preferences and ability (or willingness) to pay a certain price for a product or service. Understanding this kind of consumer behavior is critical.

Narasimhan adds that companies can drive value in ways other than price. For instance, a business could improve customer service, initiate a customer loyalty program or enhance the emotional appeal and image of a particular brand. His advice? Find creative opportunities to benefit from the entire marketing mix, he advised. "Retain loyal customers through nonprice, value-added components, and limit discounts to entice new buyers or brand switchers."
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New Stimulus Plan . . . Rising Travel Costs

on Thursday, January 24, 2008

News from Washington this morning says that congressional leaders and Bush administration officials have reached a deal on an economic stimulus package that would send checks to most taxpayers in an effort to keep the economy from falling into recession.

That's good news for businesses, big and small, who may be understandably nervous about a widespread business slow down stemming from the housing and credit crisis, the high cost of oil, and the decreasing value of the U.S. dollar.

The rumor from D.C. is that Americans earning $75,000 or more or couples earning at least $150,000 will be excluded from the rebates.

In addition, CNN is reporting that the deal would pay taxpayers $600 and two-wage-earner households as much as $1,200. A per-child credit of $300 is reportedly in the cards
The stimulus plan will also include tax breaks for businesses to encourage them to buy equipment. The total price tag of the package is expected to be at least $150 billion, which is equal to about 1 percent of the nation's economic activity for a year.

Even so, business owners are already showing signs of cutting back and looking top-to-bottom for ways to slash operating costs. One way they're doing so, according to a recent article from Forbes is to decrease business travel. The Forbes articles cites David Ulevitch, CEO of Open DNS, a networking services start-up, who stays at a friend's house when he travels on business from San Francisco to New York City.

"I never tell people they can't stay at a hotel," Ulevitch, 25, tells the magazine. But he does keep them abreast of the company's financial situation, operating under the assumption that if employees know where a company's money is going, they'll pay closer attention to expenses now in anticipation of a bigger payoff later.

Ulevitch might be on to something. Even is a slowing economy, business travel costs are on the rise.

According to American Express Business Travel, the average cost of a domestic roundtrip plane ticket rose 7 percent last year (from $216 to $231), while the average international roundtrip fare rose 5 percent (from $1,614 to $1,707).

In addition, hotel and car rental rates are on the rise, according to American Express. Car rentals charges climbed 4.5 percent last year, and the average price for a night's stay in an American hotel room jumped from $182 to $200.

One way companies can save money on travel costs is to - that's right
- spend more money.

"If you can spare the extra dough to hire a dedicated travel manager, full or part time, to handle these details, there's a good chance this will save you money in the long run," says Forbes. The magazine also advises that business owners opt for a deal with a mid-sized room rate plan over a stay at a budget chain. "You'll pay a bit more, but they often offer better security and complimentary amenities like breakfast and gym access. With average stays at budget rentals jumping 19.3 percent last year, this is a no-brainer.

"And don’t be afraid to reward employees who show they are conscious of the bottom line. If they opt to stay with a friend while on business, send them off with permission to take their host to dinner."
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January 22, 2008: Common Myths Bout Recessions

on Tuesday, January 22, 2008

With the markets roiling today, although not as roughly as many economic pundits had predicted before the Federal Reserve announced a three-quarter percent cut in its prime lending rate (from 4.25% to 3.50%), maybe we can exhale and examine what lies in front of us, from an economic viewpoint.

A lot of people are predicting a U.S. recession, if not a global one. Of course, many of these so-called experts have been predicting a recession for five or six years now (I call them "broken clock" pundits because even a broken clock is right twice a day) so their track record is fairly dismal.

But even if we are entering a recession, or at least facing one down, there are certain myths associated with recessions that need to be aired out.

Kevin Hasset, a business writer for The Washington Post, does a great job of that this morning with an article touting common recession myths.

Writes Hasset: "Economists have the same occupational hazard as baseball managers and football coaches: Every person on the street knows their job better than they do. And if you listened to the economic stimulus package talk last week from the White House and Capitol Hill, not to mention Federal Reserve Board Chairman Ben Bernanke, you could be forgiven for thinking that the recession is just around the corner. But the main result of all this chatter is that far too many myths about recessions have made their way into popular culture."

Myth number one, writes Hasset, is that we are already in a recession.

"The truth is, nobody knows. The responsibility for declaring the stages of the business cycle is informally held by that most dreaded of concepts -- a committee of economists. The Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) uses a number of economic indicators, including personal income, unemployment, industrial production and sales and manufacturing volume, to determine the health of the economy. It's not true that they declare a recession if economic growth is negative for two quarters in a row. If it were that simple, we wouldn't need a committee."

Hasset makes a good point; that The NBER's pronouncements historically come long after recessions have begun, roughly six or seven months after the fact, on average. For example, by the time the bureau announced the recession of 1991, it had already ended.
right now, we can only assess the economy's performance through November, 2007. The next quarterly gross domestic product reading won't come out until March. The best data indicates that, as of last November, the U.S. was clearly not in a recession.

Hasset also notes the myth that the stock market always "tanks" in a recession.

"Not so," writes Hasset. "With the economy heading south during recessions, the conventional wisdom is that stock prices drop as well. Stocks usually drop before a recession, something that may be happening now. However, the market tends to look ahead and starts to respond favorably to the expected end of a recession long before it occurs. Influential economist Donald Luskin of Trend Macrolytics recently ran the numbers and found that stocks have produced an average return of 12.1 percent in post-World War II recessions. This is only slightly below the average return outside recessions."

Of course, that hasn't stopped the massive sell-offs we've already seen this week in the global financial markets. But the facts say the best move may be to grip your armchair, take a stiff drink, and ride out the lousy markets. History tells us that the stock markets recover quickly - - and that you don't want to be on the sidelines and miss out on the big gains.

Even our health improves during a recession, Hasset points out, despite the common myth that we're all lining up to dive off the Golden Gate bridge out of despair.

"David Mamet once told an interviewer that he got the inspiration for his 1984 Pulitzer Prize-winning play "Glengarry Glen Ross" from an account of a salesman's fatal heart attack, caused by a recession "so vicious the competition was for jobs and sales, especially among older men." However, for most Americans, the story is quite the opposite. Americans get healthier as the economy gets worse. Unemployment tends to increase during recessions, but economist Christopher J. Ruhm of the University of North Carolina at Greensboro has found that a temporary one percentage point increase in the unemployment rate leads to a 0.5 to 0.6 percent reduction in the mortality rate, or about 14,000 fewer deaths per year.
Why the health benefits? With more free time and less money on their hands, people tend to consume less tobacco, exercise more, prepare healthier meals and lose weight. In addition, they are much less likely to have car and other accidents, and to catch communicable and sometimes fatal diseases such as influenza. Among the top 10 causes of death in the United States, only suicide rates show a substantial unemployment-driven increase. Even deaths caused by heart disease fall substantially."

So there you have it. Things may not be as bad as we all think. A nice thought on another rough day on Wall Street.
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World Markets in Turmoil, US Economy on the Brink?

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Oh boy, our domestic financial flu is spreading, and overseas financial markets are in a swoon as a result.

That's the big news today even as the U.S. financial markets are closed for Martin Luther King Day. With U.S. banks and stock exchanges closed down in honor of the slain civil rights legend, Americans can only watch in increasing despair as global markets respond poorly to our economic struggles and the government's early attempt's to avoid a full-fledged recession.

This from today's Associated Press:

"Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.
U.S. markets were closed for Martin Luther King Jr. Day, but the downbeat mood from last week's market declines there circled through Europe, Asia and the Americas."

The news coming in from foreign bourses reads like a "who's who" of declining financial performance. Britain's benchmark FTSE-100 fell 5.5 percent to 5,578.20, France's CAC-40 Index dropped 6.8 percent to 4,744.15, and Germany's blue-chip DAX 30 lost 7.2 percent to 6,790.19.

The news from Asia wasn't much better. India's benchmark stock index fell 7.4 percent, while Hong Kong's blue-chip Hang Seng index slid 5.5 percent to 23,818.86, its deepest slide since the Sept. 11, 2001, terror attacks.

Even our neighbors to the north and south are suffering from exposure to the U.S. economy. Canada's S&P/TSX composite index on the Toronto Stock Exchange fell by 4 percent in early afternoon trading. In Brazil, stocks were off 6.9 percent on the main index of Sao Paulo's Bovespa exchange.

Why the global stock malaise? Analysts say the U.S. response to its economic woes -- a potential $145 billion stimulus package announced by President Bush and hints of either a .50 or more reduction in interest rates by the Federal Reserve -- proved anemic in the eyes of foreign investors, leading to a global-wide selloff in world financial markets.

"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think there's much chance of that though," Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers Ltd. in London, told the AP.

"It's another horrible day," echoed Francis Lun, a general manager at Fulbright Securities in Hong Kong. "Today it's because of disappointment that the U.S. stimulus (package) is too little, too late and investors feel it won't help the economy recover."

The consensus from overseas is that the stimulus package has arrived too late and in the form of too little substance to offer any real protection against a recession. And the Federal Reserve's proposed interest rate cut could hurt as much as help, given the rising cost of consumer goods and services in an increasingly inflationary economic environment.

While Asia's leading economies, notably Japan, India and China, are decreasingly dependent on the U.S. economy in recent years, the notion of anxious Americans closing their pocketbooks is enough to send investors worldwide running to the exits.

Tomorrow should be an interesting day when the U.S. financial markets reopen, "interesting" in the way that King Kong was interesting as he rampaged through Manhattan. Pessimists are already lining up to predict that the Dow Jones Industrial Average will fall through not only the 12,000 barrier this week, but the 11,000 level, too.
If that really does happen, look for the Fed Reserve to slash interest rates by a full 100 basis points, and not the 50 basis points most economists are talking about. Inflation be damned, loosening credit significantly may be the last, best hope to keep the U.S. economy -- and the rest of the world -- out of recession.
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A Train Wreck in Slow Motion

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Keeping track of the economic news is getting nerve-wracking - akin to watching a train wreck in slow motion.
 
In the past 72 hours we've seen . . .
 
- A Fortune magazine study showing that about 75% of Americans who think we're either already in a recession or are heading toward one (no surprise to me -- we in the media have been scaring people half to death over the economy over the past year. That sentiment has now taken hold among consumers in a self-induced prophecy. The trouble is, about two-thirds of the economy relies on consumer spending. So if Americans pull back financially, we really could fall into a recession).
 
- An amazing interview on CNBC last night between "Mad Money" host Jim Cramer and Donald Trump. In it, The Donald alternated between touting a "great investment environment" within three months to the U.S. sliding into not a recession, but a depression.
 
- The announcement of a fiscal stimulus package from the White House, totaling $150 million in tax rebates, loans, and other aid packages to lower-and-middle income Americans. Wall Street watched President Bush's speech on the stimulus package, shrugged, and sold more stocks. We think even Wall Street is finally realizing there isn't much government can do to sway the economy one way or another.
 
-- Also news from the Financial Times on the impact that the economic crunch is having on the technology sector, usually one of the first sectors hit by a recession. Comparing things to 2001's nasty tech recession, the FT says that Wall Street took fright at a cautious forecast from Intel and braced for the fall-out from an economic slowdown in the US, the technology sector’s biggest market.
 
There was some good news amid the carnage. "Executives like these brush off comparisons with the last tech downturn. One-off factors, such as fears about Y2K and over-inflated promises during the internet bubble, distorted the picture then, said the Times. “People hyped up the next generation of software,” he said.
 
Tech executives also point to their broader diversification. While emerging markets represent 10-15 per cent of the revenues of most big tech companies, they have come to account for a far larger part of their growth.
 
"Yet a tighter economy could still expose those companies that don’t have the product mix, global reach or variable cost structures to withstand falling IT budgets and consumer spending in the US – even if an economic slowdown doesn’t spread more widely," said the paper. "The stock market has already cast its votes, handing the tech sector – which normally enjoys a January rally – its worst new-year start for years."
 
The PC and microchip sector are getting blasted the most. A boom in PCs is expected to cool this year, the paper reports, pushing shares in Hewlett-Packard and Dell each down by 16 per cent. And profit-taking has hit high-fliers like Apple (off 20 per cent) and Research in Motion (26 per cent).
 
We don't know about anyone else, but we're going home this weekend and having a stiff drink. Because, finally, the recession "pom-pom" squad has what it's wanted -- the ingredients for a deep and wide economic downturn here in the US are all present and accounted for.
 
Get ready to tighten your belt buckle. it's going to be a bumpy ride in 2008
 
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on Thursday, January 3, 2008

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Welcome to the Source One Strategic Sourcing Blog

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Welcome to the Strategic Sourceror. Launched in January 2008, this site is dedicated to providing up-to-date news, current events, opinions, press releases, cost-saving tips and best practice articles in business topics surrounding strategic sourcing, supply chain, procurement, purchasing and spend management.

This blog is sponsored and maintained by Source One, a leading provider of procurement services since 1992.  We have a dedicated team of journalists writing breaking news supply chain and procurement news stories as well as frequent contribution from our own in-house industry experts.  We hope to provide a new forum for conversation that focuses on more than just software companies and news stories about the Fortune 500.

Have an idea for a story?  Want some advice on sourcing a particular commodity?  Contact us and we will see if we can help.
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