From: Max More (max@maxmore.com)
Date: Sat Jun 29 2002 - 16:04:05 MDT
At 03:44 PM 6/29/2002 -0400, you wrote:
>>If Microsoft were in trouble for this, many other companies will be. It
>>seems to have been a very common practice.
>
>That's what makes me question the Internet boom now. IBM likewise used
>accounting changes to increase profits in the early 1990's. Whatever they
>did is now over, and their profits are back to normal. With no change in
>their revenue stream, they appeared to recover, get a lot more business,
>and then bust about 10 years later. It was all an accounting trick, with
>no real change in business levels. I wonder if a lot of Internet boom was
>like this, where the numbers inflated, and the accounting looked good, but
>nothing really changed in the real world.
I really doubt this. Profits may not have been as good as they appeared at
some companies (but better at a few), but I think it's hard to doubt that
revenues grew fast. Setting financial numbers aside, there are many other
indicators of Internet-related growth. One handy source is the University
of Texas's Internet Indicators survey which gathered info from a range of
sources. Also, it's difficult to see how we would have had super-low
unemployment if there had been no boom.
The current confessions are certainly ugly, but not all that surprising
after a period of excess and irrational exuberance. It's a cleaning-out
time that I believe will set the stage for the *real* infotech revolution
as companies finally learn how to reorganize their business processes to
take advantage of CRM, SCM, PRM, PDM, ERM, and the alphabet soup of
IT-enhanced processes. It really *wasn't* different this time -- just as
with electricity and other major innovations, the real value will come
after a delay, until human practices have adapted to the technological
change. (This phenomenon is one of my reasons for skepticism about a
Singularity.)
>The other thing that bothers me about the telecomm accounting scandals,
>such as WorldCom, is that we have been using these numbers to estimate the
>growth of the Internet. If a lot of their customers, revenue, and capital
>investments in the Internet were overstated, our estimates of how fast the
>Internet has grown might be similarly overstated.
Again, revenues and profits may not be accurate, but number of nodes,
volume of email, Net traffic, etc. seem to be relatively safe numbers. The
Univ of Texas survey is here:
http://www.internetindicators.com/
John Chambers used that information in this 37-slide presentation (I don't
know if this has been updated to take account of revenue restatements):
http://www.manyworlds.com/logcontent.asp?coid=CO528200012451681
or
http://www.cisco.com/warp/public/750/pres_files/chambers_iei.ppt
Onward!
Max
_______________________________________________________
Max More, Ph.D.
max@maxmore.com or more@extropy.org
http://www.maxmore.com
Strategic Philosopher
President, Extropy Institute. http://www.extropy.org <more@extropy.org>
________________________________________________________________
Director of Content Solutions, ManyWorlds Inc.: http://www.manyworlds.com
--- Thought leadership in the innovation economy
m.more@manyworlds.com
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