SI
SI
discoversearch

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.
Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?


To: lurqer who wrote (22123)7/14/2003 12:45:22 AM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
The tech-stock rally could go a lot farther

From Barron's....No Bottle Rocket

By ERIC J. SAVITZ

SO HERE'S THE INTERESTING thing about the nine-month-old technology-stock rally: It could last for a while. Tech stocks have come a long way since the Nasdaq bottomed at 1114 on Oct. 9. Since then, the index is up 55%, and tech specific-gauges sport even bigger gains -- Internet-stock indicators have more than doubled. While profit-taking and other factors could trigger hiccups along the way, the case for further gains is strong.

The evidence is largely anecdotal, but corporate tech demand apparently has stopped deteriorating. The latest Goldman Sachs information-technology spending survey, released last week, found "increased optimism on second-half spending," with "a return next year to moderate growth after years of austerity."

In a research note last week, Precursor Group analysts Jaime Roca and Bill Whyman likewise asserted that "tech fundamentals bottomed months ago," and that corporate technology spending is on track for growth of up to 5% this year. While conceding that some tech stocks may be "ahead of themselves," Precursor advises "not to bail out on tech" in the second half, "as there is more fundamental improvement to come."

Equally important is that Wall Street earnings expectations appear realistic. "Analysts are finally down to their most reasonable guess," says Pip Coburn, technology strategist at UBS. "This time last year, the numbers were ridiculously too high. This year, estimates have gotten down to the doable."

That conclusion will be put to the test this week, when Intel, IBM, Microsoft and many others are due to report their June quarters. But early indications look promising, says Gerard Hallaren, technology strategist at First Albany. "The market now knows that the second quarter is okay," he says, "and that companies are going to guide up."

Of course, valuations are now far above the dirt-cheap levels reached in October, when scores of companies were trading below the value of their cash.

That said, some analysts assert that tech stocks aren't as expensive as they appear. "A good rule of thumb is, valuations matter a lot, but in the short run, financial-statement momentum matters more," says Arnie Berman, technology strategist at Soundview Technology. "This will be the third quarter in a row with positive revenue growth, and sequential growth is improving. And there's a shot that earnings forecast revisions for the next 12 months will turn positive this quarter."

Table: Tech Stock Winners and Sinners

It's also become obvious that momentum investing is back -- and seems to be, well, gaining momentum. "The market, especially Nasdaq, has decoupled from the fundamentals of the underlying businesses," says Jonathan Cohen, who runs both a tech-oriented hedge fund and the Royce Technology Value mutual fund. "But from a flow-of-funds perspective, it's clear investors are plowing money back into Nasdaq."

That notion makes some observers uneasy. "Either the stock market is accurately predicting an upturn in IT spending yet to come, or it's more of a liquidity-driven rally that has a shaky fundamental basis," says Steve Milunovich, technology strategist at Merrill Lynch.

Milunovich says he's more in the second camp, but concedes that it's hard for portfolio managers to stay away from the rally. "Both technology and growth funds have been underperforming the market year-to-date, particularly in the last three months," he says. "That's created a bit of a beta chase, as they look to catch up."

Roger McNamee, partner in both Integral Capital and Silver Lake Partners, argues that high price-earnings ratios are to be expected at the start of what he thinks could be a new five-to-10-year cycle for the tech sector. "The price moves so far have been in response to cost-cutting and very small out-performance relative to ridiculously low expectations. We've not hit the knee in the curve where revenues grow and operating leverage kicks in. When we do, people will be astonished at how much faster profits will grow than revenues."

Eleven months ago, we advised that it was "Time to Dip a Toe Back Into Tech Stocks" (Aug. 12, 2002). As it happened, the Nasdaq wouldn't bottom for two months and 200 points lower. After that, however, investors flocked back to tech.

Indeed, last year's story now looks too timid. We included buy and sell recommendations for 20 large tech stocks -- 11 buys and nine sells -- with a two-year time horizon. Given the strength of the rally, it's no surprise that the buys are doing a lot better. Ten of the 11 now are higher; of the nine sells, six are higher.

While there are still overhanging issues from the 1990s bubble, for now, the stage seems set for the rally to continue. "I don't see a negative catalyst in the short-term to send these stocks down," says Milunovich. "Valuation begins to matter again when momentum slows. As long as companies are making or slightly beating numbers, the stocks can go higher."

--------------------------------------------------------------------------------



To: lurqer who wrote (22123)7/14/2003 12:54:13 AM
From: stockman_scott  Read Replies (1) | Respond to of 89467
 
Betting everything on a hoax about Iraq

________________________________________

Uranium: As the Bush administration distances itself from false claims used to justify the invasion, the fallout remains nebulous.

--------------------------------------------------------------------------------
By William R. Polk
Special To The Baltimore Sun
Originally published July 13, 2003

The Bush administration is caught in a scandal of almost unprecedented dimensions over the justifications that it and Great Britain gave for going to war against Iraq. Call it the "yellow cake scandal." It goes to the core of whether Saddam Hussein was trying to produce nuclear weapons, thus posing a threat to the United States and Great Britain, which would justify war.

It goes to a charge by President Bush that Iraq was trying to build a nuclear arsenal in which Bush used evidence his administration now acknowledges was no good. The President's people are now saying he was given bad information by the Central Intelligence Agency, but it is worth recalling that in the campaign for a war against Iraq, intelligence sources consistently complained the White House was manipulating intelligence to build support for the war.

"Yellow cake" is the nickname of uranium oxide, a component of nuclear weapons. It is produced, among other places, in two mines (Somair and Cominak) in the west African state of Niger. Working those mines is an international consortium composed of French, Spanish, Japanese, German and Nigerien interests. They, in turn, are closely monitored by the International Atomic Energy Agency (IAEA) to ensure that no dangerous materials are diverted to unauthorized parties.

In late 2001, a rumor circulated that the government of Iraq was trying to buy yellow cake. In the shadowy world of espionage, it is still unclear who started the rumor. What is known is that some individuals or an organization forged documents to cast blame on Iraq.

The documents were appallingly crude. The letterhead on one document was obviously transplanted from some other, presumably genuine, paper; the signature of the president of Niger was copied; and, most telling of all, one signature was supposedly written by a minister who had been out of office for over a decade.

How these documents reached the British and American governments is also obscure. One story has them acquired by Italian agents and passed to the British intelligence agency (MI6), which passed them to the CIA.

When the documents reached the CIA, officials apparently concluded that, despite the papers' obvious faults, the subject they addressed was too important to be neglected. So, in early 2002, the CIA asked a retired American ambassador with 23 years of experience on African affairs (and who had been stationed in Niger in the 1970s) to investigate.

Ambassador Joseph Wilson, now a business consultant, agreed to fly to Niger to attempt to find out what was behind the story. He has described his experiences and conclusions in articles in The New York Times and the Financial Times.

When Wilson arrived in Niamey, the Nigerien capital, he consulted with the current U.S. ambassador, Barbra Owens-Kirkpatrick, and the embassy staff for whom everything relating to uranium was top priority. They told him that the story was well known and that they had already "debunked" it in reports to Washington. Then, as Wilson writes, "I spent the next eight days drinking sweet mint tea and meeting with dozens of people: current government officials, former government officials, people associated with the country's uranium business." They uniformly and formally "denied the charges." The Embassy concurred.

Returning to Washington in early March 2002, Wilson reported to the CIA and to the Bureau of African Affairs of the Department of State that, although he had not been shown the documents themselves, he was sure that "there's simply too much oversight over too small an industry for a sale [outside controlled channels] to have transpired." Too many people would have had to give approval and even more would have known about the diversion of uranium. Moreover, since it would have violated UN sanctions, a diversion would have attracted a great deal of notice. In short, he concluded, the transaction did not take place.

In his Op-Ed article in The New York Times last Sunday, Wilson revealed "there should be at least four documents in United States government archives confirming my mission. The documents should include the ambassador's report of my debriefing in Niamey, a separate report written by the embassy staff, a CIA report summing up my trip, and a specific answer from the agency to the office of the vice president (this may have been delivered orally)."

The CIA has confirmed that its account of the matter was distributed to the Joint Chiefs of Staff and the Defense Intelligence Agency in the Pentagon, the Justice Department and the FBI and the office of Vice President Cheney.

His task, Ambassador Wilson concluded, had been accomplished: "the Niger matter was settled and [so I] went back to my life."

Despite this negative report, however, senior officials of the Bush administration continued to stress the nuclear threat from Iraq. In a speech in Nashville on August 26, 2002, Vice President Dick Cheney warned of a Saddam "armed with an arsenal of these weapons of terror" who could "directly threaten America's friends throughout the region and subject the United States or any other nation to nuclear blackmail."

The next month, in September 2002, Wilson was surprised to learn that the British government had published a "dossier" or white paper on Iraqi weapons of mass destruction that included the yellow cake story. Assuming this meant that the CIA had not shared with MI6 the results of his investigation, Wilson called his contact at the CIA to suggest that he warn his British counterparts the materials were a hoax.

Wilson assumed that there was another source for the speech President Bush made on October 7, 2002, in Cincinnati in which he warned that "The Iraqi dictator must not be permitted to threaten America and the world with horrible poisons and diseases and gasses and atomic weapons." But then, on January 28, 2003, he was astonished to hear Bush in the State of the Union address pin his warnings on Saddam Hussein's possession of atomic weapons to the yellow cake story. Bush declared that "the British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

To make its case at the United Nations, the American government turned over the yellow cake documents to the Security Council. When they were examined by the IAEA, its director, Mohamed El-Baradei, informed the Security Council they were fake.

How could the U.S. government not have known? Condoleezza Rice, director of the staff of the National Security Council, replied on Meet the Press. "Maybe someone knew down in the bowels of the [Central Intelligence] Agency, but no one in our circles knew that there were doubts and suspicions that this might be a forgery."

At least as early as February 2003, all the decision makers in the Bush administration as well as the general public knew that at least this part of the rationale for the invasion of Iraq was based on forged documents, but this did nothing to deter the U.S. military onslaught.

Almost more astonishing, as late as June 25, 2003, Britain was still insisting in Parliament that it stood by reports that Iraq had been trying to buy yellow cake. Finally, on July 7, the White House acknowledged that the story was a hoax.

Should that put an end to the story? No.

As some critics of the Bush administration have pointed out, when President Bill Clinton lied about an illicit sex affair, he was subjected to a major investigation by half a hundred lawyers and was nearly impeached. President Nixon was forced to resign over the Watergate break-in and President Reagan was been closely questioned over the Iran-Contra scandal.

Important as these scandals were, their significance pales in comparison to launching a war in which hundreds of Americans have died in Iraq and thousands of Iraqis have been killed while their country has been left in a shambles. The United States initially spent nearly $100 billion on the war and is committed to far larger outlays to repair what it destroyed.

It is unlikely that many in America will accept as the last word the president's explanation Friday: "I gave a speech to the nation that was cleared by the intelligence services. And it was a speech that detailed to the American people the dangers posed by the Saddam Hussein regime. And my government took the appropriate response to those dangers. And as a result, the world is going to be more secure and more peaceful."

History will judge the truth of that assertion, sooner, perhaps, than the Bush administration would wish.

____________________________________

William R. Polk was a Member of the Policy Planning Council in the administrations of President John F. Kennedy and Lyndon Johnson. He has written widely on American policy and international affairs. He is now a director of the W.P. Carey Foundation.

Copyright © 2003, The Baltimore Sun

sunspot.net



To: lurqer who wrote (22123)7/14/2003 8:30:36 AM
From: stockman_scott  Respond to of 89467
 
The Global justice Movement in a neo-Imperial Moment

By Mark Rupert

faculty.maxwell.syr.edu