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To: Les H who wrote (9472)	3/9/2003 10:01:57 AM
From: Les H	Respond to of 306849

Silicon valley seattletimes.nwsource.com

To: Les H who wrote (9472)	3/9/2003 12:30:57 PM
From: Lizzie Tudor	Read Replies (3) \| Respond to of 306849

Many companies, though, are investing for a future they cannot reach. They need to be restructured—downsized, merged, acquired, or liquidated. But the restructuring hasn’t happened. They're kidding-right? Where was McKinsey in 2000 with this sage advice is what I want to know. I think we've already experienced most (not all) of the consolidation. And my favorite statistic- the number of naz listed companies at 1981 levels, really doesn't support the "consolidation needed" hypothesis now.

To: Les H who wrote (9472)	3/10/2003 10:39:08 AM
From: Amy J	Read Replies (1) \| Respond to of 306849

Hi Les Horowitz, re: article The article's comment about high-tech execs not wanting to merge with other high-tech firms is ludicrous - I have so many entrepreneur friends whose companies merged with other companies, and no, this doesn't create hostility. High-tech consolidates all the time and we're proactive about it when there's a prudent business need to do so. And the larger companies are constantly merging with others when it make sense. But we're not in the business of merging just to line a particular consulting firm's own pockets. The problem the article has, is with its lack of facts and its grossly sweeping generalizations. I can point to many mergers. In fact, so many mergers have already happened that we're currently in a short-term merger lull - this is generally acknowledged as the sign of the bottom. According to a report (that I'd like to confirm), Nasdaq went from approximately 5500 companies down to 3500 companies, and that's less than the number of companies in 1996. Imagine - we have fewer companies now than before the massive business and consumer deployment of the invention of the Internet. Their comment about 15% more companies than 1990 doesn't wash as significant as they're neglecting an incredibly huge once-in-a-lifetime type of enormous invention cycle. The investment banking business is really hurting right now, so it's logical for them to drum up mna business. I'm of the impression McKinsey gets paid to analyze prospective MNA clients, so they also benefit if they drum up some industry MNAs. The money guys are fighting like mad to get jobs in high-tech - I can't even begin to tell you the number of mckinsey/investment bankers/mna consultants/vc's that are trying to get jobs with high-tech firms. Absolutely superb people, but this trend makes it obvious their industry is shrinking at the moment, so they're trying to enter ours - they know companies that actually have product revenue generation is where the money is at these days. The article dissed high-tech execs and I wonder if there is a political gain to do so - does it enable easier political placement of an outsider from say a McKinsey, who is in the business of making money by placing their management consultants into a high-tech company. The article could give the impression of sounding self-serving. Maybe they need to stop chasing money for a moment and sit back for a second and be patient - their mna business will come back in a year. Maybe they need to back off and let Silicon Valley innovate again. We're certainly seeing higher quality innovation coming out of entrepreneurs than what we did in 2000. A huge sweeping of the floor just happened in Silicon Valley - it almost looks like a depression here, but now maybe some pillars are being created. I'm seeing innovation here that has rather amazing implications for the future of high-tech. At the moment, the vc's are busy in China so the valuations are quite good for angels right now. These days one can buy more company than what a ceo could get at a startup. And the strength or stamina of these companies is so much stronger than the 90's startups. Better stuff. We just lost 3000 private equity firms - probably a few more thousand to go out. The strong stuff will be the only stuff that's left. I see a couple companies whose businesses will create more demand for some of the larger mature companies - in ways that I never would have dreamed of. Silicon Valley will be back. But the return may be quiet and less hyped - engineers are getting back in the driver's seat, as they should be. And the angels are pushing out the vc's, which is probably what's needed for a solid base to be rebuilt again. Regards, Amy J PS For public companies, maybe it's poison pill provision time to fend off self-serving interests?