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To: Sarmad Y. Hermiz who wrote (129744)	8/7/2001 11:42:07 PM
From: H James Morris	Read Replies (2) \| Respond to of 164684

I thought you might find this article interesting. >Competitive advantage and the New Economy The bear market of the last 18 months has sent a lot of great companies reeling. But it’s important not to make sweeping generalizations about the destructive power of the New Economy out of what is really just a normal example of how U.S. capitalism works out the demand-supply imbalances generated by an overabundance of cheap capital. It’s certainly far too early to say that the New Economy is peculiarly hostile to a company maintaining a long-term competitive advantage. For example, I think you can make a good argument that profit margins at EMC Corp. (EMC, news, msgs) will be lower in the future than they’ve been over the last five years because the high profit margins of the last five years have attracted new competitors to the storage market. But that’s the way capitalism has always worked. Excess profits attract competitors. That’s very different from saying that in the future EMC won’t dominate the storage market because its installed base, its massive and aggressive sales force, and its economies of scale aren’t important competitive advantages anymore. I haven’t seen anything during the bear market in technology that suggests that some other company has been able to negate these advantages. Our feeling that competitive advantage doesn’t last very long anymore is attributable, I think, to recent mistakes in deciding that some relatively untested companies had managed to achieve a lasting edge over their competitors. Two years ago, for example, many of us thought Amazon.com (AMZN, news, msgs) had established such an edge in retailing that it would simply roll up as much of the sector as it wanted. I’d argue that Amazon.com has failed to do that not because some character of the New Economy attacked and eroded that competitive advantage, but because that competitive advantage was a lot more potential than actual. And in the testing, Amazon.com has, so far, failed to demonstrate that it has achieved any competitive advantage over well-run traditional retailers. Wal-Mart Stores' (WMT, news, msgs) competitive advantage seems stronger than ever. It’s simply a lot harder to build a sustainable competitive advantage than it seemed to be a year ago -- and a lot harder than it seemed then for investors to accurately identify it in an immature company.

To: Sarmad Y. Hermiz who wrote (129744)	8/8/2001 5:07:28 AM
From: GST	Read Replies (1) \| Respond to of 164684

Going into recession -- sorry. "Traders were slightly rattled also by data from the Federal Reserve, released after the close last night, that U.S. consumers unexpectedly cut back their borrowing in June, marking the first decline in consumer credit outstanding since 1997. The numbers are bad news as markets have been counting on American consumer spending to continue to prop up the flagging economy. "We really need to see consumers continue to keep spending, but the consumer credit numbers shows people are being more conservative than expected. The economy could really struggle," Ley said."