Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (9366)	4/22/2000 10:30:00 AM
From: John Carragher	Respond to of 24042

Lee interview with Greg Smith in Barrons He doesn't see inflation problems some notes.. Q: It seems you're not convinced the tight labor market is any kind of a threat. A: No, I am not, but there is a difference between market impact and national policy. If you run a corner store or a regional business you are somewhat constrained by the local labor market. If labor is tight and the price for it goes up, it is an issue for you. But in the size and breadth of the companies in the public market we typically invest in, if local labor costs go up, you usually shift your process or your production to someplace where that isn't a problem, and that's where the Internet and business application comes in. Big companies are not as constrained by these definitions of unemployment in the U.S. that maybe a small or local company has to deal with, or that Greenspan has to watch out for in terms of national policy. Q: What about the use of stock options to attract talent? A: If there is something that could go wrong that we can't control -- and Jack Welch referred to this in our interview -- it would be if the stock market fell apart because an important part of compensation and incentive is to get away from cash and the whole concept of salary-and- bonus as it was practiced prior to the 'Nineties. Now compensation is tied to performance as measured in the stock market. Maybe that can be ruthless and unfair sometimes, but it's the new way people get paid. It takes out the notion of a fixed cost that goes up all the time, which is the definition of wage inflation. Your compensation will go up and down maybe every day, but good results generally are rewarded. Paying people a lot of money when results are good is good. What we are getting away from is paying people a lot of money regardless. To neutralize the effect of dilution from giving out options, most companies are taking their free cash flow and buying back stock. Tax-wise you are better off, because instead of a dividend you're getting better support in your share count. And everybody has become a little more tax-savvy and a little more capital-gains oriented.

To: Lee who wrote (9366)	4/22/2000 11:13:00 AM
From: Hank Stamper	Read Replies (1) \| Respond to of 24042

Hi Lee, Thanks for the charts on employment costs. I was aware--not of those charts but of the general picture. Perhaps I did not write clearly enough, but I used 'compensation costs' as part of an example. I should have put in the sort of information you provided. Since we are on the topic of the current compensation picture, take a look at the following link. Here is, I think, a picture that provides more context than the charts. The message to us should be (I believe) 'watch out, the simple wage numbers don't tell the real story; compensation costs are swift on the rise.' dismal.com "In actuality, I can't see how anyone can make any conclusions about how current economic conditions will evolve in the next six months as with any dynamic system, there are too many variables to consider. " There is merrit in your words. At least as pertains to me and perhaps thee. There is so much data and the typical individual cannot make an adequate augury. However, I like to follow the lead of Greenspan who not the average guy. My interest in Greenspan is not whether he is right in his forcasts but rather, how he acts. He has and will continue to act as if inflation is a serious problem. On compensation costs again: the Greenman has stated he is seriously concerned about rising compensation costs that have not been offset by productivity increases. (He has oft-noted that we have huge productivity increases due to technology.) He has been, is now, and will continue to act to slow the economy. I am a sort of "don't fight the Fed"-guy. With regard, David Todtman