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To: spal who wrote (37606)	1/13/2000 9:48:00 PM
From: Dr. D	Read Replies (1) \| Respond to of 41369

Greenspan Warns About Imbalances Associated Press Online - January 13, 2000 20:46 Jump to first matched term By MARTIN CRUTSINGER AP Economics Writer WASHINGTON (AP) - Americans, enjoying the most prosperous times in a generation, have fueled a remarkable economic boom, but there are dangers that growing imbalances could derail the economic expansion, Federal Reserve Chairman Alan Greenspan said Thursday. Speaking to the Economic Club of New York, Greenspan expressed an upbeat assessment of the economy's current performance, noting that next month it will become the longest expansion in U.S. history, surpassing the 106 months of uninterrupted growth in the 1960s. "There can be little argument that the American economy as it stands at the beginning of a new century has never exhibited so remarkable a prosperity for at least the majority of its citizens," Greenspan said in the speech, copies of which were released in Washington. However, Greenspan also repeated worries he has voiced before that the Federal Reserve must be alert to the growing imbalances between continued strong consumer demand, bolstered by Americans' soaring stock portfolios, and the dwindling supply of available workers, given that unemployment is now at a 30-year low. In addition to concerns about rising inflation pressures, Greenspan also repeated concerns he has expressed in the past that the huge runup in stock prices could without warning reverse itself. The Federal Reserve has raised interest rates three times in the past six months in an effort to slow the economy and relieve pressures on tight labor markets before they trigger inflationary wage demands. While it is widely expected that the Fed will raise rates when they meet again on Feb. 1-2, Greenspan did not specifically address that issue, saying only that the central bank is always forced to make interest-rate decisions based on incomplete evidence of where the economy is headed. "Regrettably, we at the Federal Reserve do not have the luxury of awaiting a better set of insights into this process," Greenspan said in the speech. "Indeed, our goal, in responding to the complexity of current economic forces, is to extend the expansion by containing its imbalances." In all of his comments, Greenspan was careful to balance his worries about the future with expressions that some fundamentally beneficial changes are occurring in the economy that have given a strong boost to U.S. productivity. Greenspan said that when economists look back at the current period a decade from now, they may well conclude "at the turn of the millennium, the American economy was experiencing a once-in-a-century acceleration of innovation which propelled forward productivity, output, corporate profits and stock prices at a pace not seen in generations, if ever." But Greenspan also said there could be an alternative view of the current period when viewed in a decade. "Alternatively, that 2010 retrospective might well conclude that a good deal of what we are currently experiencing was just one of the many euphoric speculative bubbles that have dotted human history." That comment echoed Greenspan's famous worry, voiced in December 1996, that investors might be in the grip of "irrational exuberance." At the time, the Dow Jones industrial average was trading around 6,400. Despite worries expressed since that time by Greenspan about market valuations, the Dow closed on Thursday at a new record of 11,582.43. In his Thursday speech, Greenspan said that the boom in stock prices, by bolstering consumer spending, has probably added around 1 percentage point annually to economic growth since 1996. The economy during this period has been growing at annual rates of around 4 percent. marketwatch.newsalert.com.

To: spal who wrote (37606)	1/13/2000 11:27:00 PM
From: Joe S Pack	Read Replies (2) \| Respond to of 41369

Spal, Here are my thoughts on integration and other practical issues: 1) Technical: TWX cover about 23M cable lines. Their Road Runner (RR) is getting updated but have to see how it will start handling traffic surge due to AOL bringing in millions of customers. Note: VP of Technology at AOL (Mario Vecchi) is the person who put Time-Warners RR from scratch and then joined AOL last year. So he knows what TWX has and its architecture top to bottom. So on the technology side it should be a plus. In fact one of the recent presentation he kept on insisting about scalability of AOL and reliability. Believe me, his background is from a telephone R&D lab and he knows what is meant by reliable systems and service. So going forward should not be as difficult as one would like to think. 2: Coverage side: How will they address rest fo the US, where they don't have cable plants? I think they will have two choices: 1) Continue their good relationships with RBOCs (Bell Atlantic, SBC, Ameritech) so that they provide DSL based broadband services in areas where they cannot have their own cable. They also have invested 1.5B dollars with Hugh' Electronics to provide dish based DirectTv. They are also buying a minority position in PALM computing (The dominant leader in hand held PDAs, where mighty Microsoft has been miserabily failing for the past two years) which will be IPOed next month. These will provide opportunity to attack uncovered ares through satellite and wireless devices. 2) MediaOne owns 25% of RR and ATT is in the process of acquiring MediaOne. A few months back Time-warner and ATT announced an agreement whereby Time-Warner will sell ATT's telecom services over their systems. After this merger AOL won't like to carry ATT's service to its customers and may try to do its own services. As a give-and-take they may still allow ATT to sell their services provided ATT opens its cable plants for AOL to sell its BB content. If this happens AOL will be truely "ANY where". 3. Management: I think this may be bigger issue as two cultures need to take this opportunity to work together rather than outsmart each other. I think Case and Pittman are practical guys and hence they gave CEO to Mr. Levine while retaining 3 out of 6 board members from AOL guys (Case - Chairman, Pittman - COO of the combined company, CFO of AOL, who will control the purse). I think in the long run Case may remain Chairman and Pittman may become CEO. So IMHO they will make sure that things won't get out of hand. 4. Integration operations: They need to consolidate their IT infrastructure. It is not clear what kind of systems both companies have (SAP or a collection of business applications from multiple vendors running one several different plateforms etc.). Consolidation of billing and financial. This will involve some hard work and may take time. 5. International markets: I think they have a better shot here and they have several well established name brands and assets. In summary it may take some time but they will eventually make it and become a giant. -Nat

To: spal who wrote (37606)	1/14/2000 1:41:00 AM
From: Sonny McWilliams	Read Replies (1) \| Respond to of 41369

Spal. This is not an easy question to answer. There seems to be always a risk when it comes to mergers. But judging by the appearances of those guys on TV, it looks like this merger may go smoothly. I think both parties will try their best. This is a merger that does not have much overlapping and nobody is losing their jobs. S.Case already said they will need more help, not less. So, IMO things look well so far. 2 days and who knows how many more to go before a merger. I guess you could call it a marriage made in cyberspace and fairy/fantasy land. gg. Sonny