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To: altair19 who wrote (162442)	3/6/2009 8:15:50 PM
From: stockman_scott	Respond to of 361437

;-)

To: altair19 who wrote (162442)	3/6/2009 8:30:35 PM
From: stockman_scott	Respond to of 361437

Squawk Box With Buffett _______________________________________________________________ The Oracle of Omaha is spending Monday morning with CNBC viewers. Warren Buffett joins Becky Quick to anchor a live "Squawk Box," broadcast from Omaha at 6am ET. Buffett will answer viewer questions during the three hour show, and talk about Berkshire Hathaway's performance, the markets and the economy. Questions can be submitted to AskWarren@cnbc.com. At 8pm ET Monday, Quick hosts "The Billionaire Next Door: Restoring Trust," a special about Buffett's advice for restoring the economy.

To: altair19 who wrote (162442)	3/7/2009 7:07:53 AM
From: stockman_scott	Read Replies (1) \| Respond to of 361437

Rush to Judgment by Peter Schiff lewrockwell.com March 7, 2009 Talk show host and conservative icon Rush Limbaugh recently ignited a firestorm of criticism for expressing his desire that Barack Obama should fail. Democrats, and even some Republicans, suggested that he had put aside his patriotism to wish for an economic collapse that would result in political advantage for conservatives. However, if you believe as I, and apparently Rush, that Obama's plans will prevent recovery, then wishing that they fail to become actual policy is the right thing to do. The problem is that since Mr. Limbaugh has a history of partisanship, and since he did not forcefully criticize the Bush Administration for similar (if slightly more modest) plans, many cannot see past the messenger to recognize the truth in the message. I am certain that if Obama and the Pelosi/Reid Congress succeed in fully implementing their agenda, there is no chance the U.S. economy will recover its position as world's leading economy. Instead, America will start down the road that has condemned so many nations to economic mediocrity. By continuing and magnifying the Bush stimulus and bailout policies, the economic rebalancing that is so vital to a sustainable recovery cannot occur. Limbaugh merely said what members of the loyal opposition would say if they were true to their supposed philosophy. But since so many Republicans supported the Bush bailouts and stimulus packages, it would be too blatantly hypocritical to reverse course now. In truth, for all his talk of change Obama has merely continued and expanded the failed policies of Bush. The one aspect of Obama's agenda that has galvanized Republican criticism is higher taxes on the rich. While I also abhor tax increases, the spending increases supported by both parties are far more damaging to the economy. In fact, I actually support Obama's decision to eliminate the "carried interest" tax advantages that had so unequally benefitted hedge fund managers. If I had my way the income tax would be abolished completely, but as long as we have one it is not fair for hedge fund managers to pay lower marginal taxes than the guys who shine their thousand dollar shoes. The arguments that higher tax rates will discourage hard work and initiative are true across the entire income spectrum. It makes no sense politically to single out the mega-wealthy for special treatment. The sad truth is that Republicans are spending their dwindling political capital on a non-issue. Most hedge funds relied on leveraged borrowing to produce oversized returns. Now that the debt markets are essentially closed, there is not much "carried interest" income left to tax. The bigger issue is that few Republicans are making any serious effort to oppose the staggering deficits that will guarantee huge future tax increases and runaway inflation for everyone, rich and poor. By simply clinging to tax cuts as their single economic miracle cure, Republicans risk further marginalization. The president claims that his constituency is Main Street, not Wall Street. But for all the scorn heaped on the "fat cats," we must remember that it took two to tango. Sure, Wall Street loaned out too much money, but it was Main Street that borrowed it. Average Americans used the windfall for the biggest shopping binge in world history. As a result our entire economy has been transformed from one based on savings and production to one based on borrowing and consumption. Now that this false paradigm has been exposed, the transition back to economic viability will be painful. Jobs must be lost in the service sector so that labor can be reallocated towards goods production. Asset prices, for both stocks and real estate, must decline to levels appropriate for current circumstances. In addition, the dollar's exchange rate must fall to reflect our weakened competitive position. However, by postponing these adjustments we merely assure an even more painful transition in the future, especially for the average Americans whose interests our new president claims to champion. But by then Obama will have his coveted second term. Rush is right on this one: Obama's agenda must fail now, lest we wander too long down the road to destitution. -Peter Schiff is president of Euro Pacific Capital and author of The Little Book of Bull Moves in Bear Markets and Crash Proof: How to Profit from the Coming Economic Collapse.

To: altair19 who wrote (162442)	3/7/2009 6:33:08 PM
From: stockman_scott	Respond to of 361437

Surging U.S. Unemployment Rate Puts Pressure on Obama (Update2) By Bob Willis March 7 (Bloomberg) -- The jump in the U.S. unemployment rate to the highest level in a quarter century last month suggests the recession is deeper than the Obama administration forecasts and additional measures may be needed to restart growth. The jobless rate rose to 8.1 percent in February as employers reduced payrolls by 651,000, the Labor Department said yesterday in Washington. Losses have now exceeded 600,000 for three straight months, the first time that’s happened since collection of the data began in 1939. Unemployment has already reached the average rate the White House projected for the whole year. The administration needs to keep its focus on repairing the banking system and implementing the stimulus rather than get diverted by other goals such as healthcare changes, said John Ryding, chief economist at RDQ Economics LLC in New York. “They should be focused on stabilization” of financial firms “and stimulus -- and that should not only be ‘Job one,’ that should be the only job right now,” Ryding said in an interview with Bloomberg Television. “The question is, is it recession or is it something worse than recession?” U.S. stocks posted the biggest weekly decline in three months after American International Group Inc. reported a $61.7 billion loss and billionaire investor Warren Buffett said the economy is in “shambles.” Debt Concerns The Standard & Poor’s 500 Stock Index slumped 7 percent this week, bringing the drop since President Barack Obama took office on Jan. 20 to 20 percent. Benchmark 10-year Treasury yields rose to 2.88 percent yesterday from 2.81 percent the previous day amid concern the government will need to sell more debt. While the president’s $787 billion stimulus plan aims to create or save 3.5 million jobs, the U.S. has already lost 4.4 million since the recession began in December 2007, with more declines coming. Tumbling global demand is prompting companies from General Motors Corp. to Sears Holdings Corp. to step up firings. “Without any engines of growth, the labor market and the economy are likely to remain depressed for some time,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, wrote in a note. LaVorgna now sees the jobless rate reaching 10 percent by year-end, and he abandoned his call for economic growth to emerge in the second half of 2009. ‘All That’s Necessary’ Obama said today that he’s “committed to doing all that’s necessary to address this crisis,” citing the already-passed stimulus package and measures to slow the tide of home foreclosures and to unlock credit. “These aren’t just statistics, but hardships experienced personally by millions of Americans who no longer know how they’ll pay their bills, or make their mortgage, or raise their families,” Obama said in his weekly address. Revisions to January and December statistics lopped an additional 161,000 jobs from previous estimates, the Labor Department’s figures showed. Payrolls were forecast to drop by 650,000, according to the median of 80 economists surveyed by Bloomberg News. The jobless rate was projected to jump to 7.9 percent. “We’re going to have to have a lot more jobs than 3.5 million” generated to get a “serious recovery” in the economy, Harvard University professor Robert Barro said in a Bloomberg Television interview. Barro calculated a 30 percent chance the U.S. will slide into a depression, which he characterized as at least a 10 percent drop in gross domestic product. Factory Payrolls Factory payrolls fell by 168,000 after declining 257,000 in the prior month. Economists forecast a drop of 200,000. The decrease included 25,300 jobs in producers of machinery and 27,500 in makers of fabricated metal products. Automakers, at the heart of the manufacturing slump, continued to slash jobs and trim costs to stay in business. General Motors last month said it would cut 47,000 more positions globally while Chrysler LLC announced 3,000 more layoffs. Auto-parts makers are also suffering. Canton, Ohio-based Timken Co., the supplier of bearings to the world’s top five carmakers, said March 2 it would eliminate as many as 400 salaried jobs this year. Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 375,000 workers after cutting 276,000. Financial firms cut 44,000 positions after a 52,000 decline the prior month. Retail payrolls decreased by 39,500 after a 38,500 drop. Sears Shuts Stores Sears last week said it would shutter 24 stores, on top of eight closings announced earlier. Government payrolls increased by 9,000 after a gain of 31,000 the prior month, one of the few areas still hiring. Another 26,000 jobs were added by education and health-care providers. Employers are holding the line on hours. The average work week held at 33.3 hours in February. Average weekly hours worked by factory workers dropped to 39.6 hours from 39.8 hours, while overtime also decreased to 2.6 hours from 2.8 hours. That brought average weekly earnings up by $1 to $615.05. Slumping sales have caused recent Chapter 11 filings by retailers such as Everything But Water LLC, the largest U.S. retailer of women’s swimwear, and Ritz Camera Centers Inc., the largest chain of camera stores. Economists polled by Bloomberg last month forecast consumer spending will contract through the first six months of this year after sliding in the last half of 2008. Purchases have not contracted for four consecutive quarters since records began in 1947. If the recession persists through the first half of this year, it would the longest since the Great Depression. The economy shrank at a 6.2 percent pace in the fourth quarter of 2008, the weakest performance since 1982. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net Last Updated: March 7, 2009 13:07 EST

To: altair19 who wrote (162442)	3/8/2009 7:31:37 AM
From: stockman_scott	Read Replies (1) \| Respond to of 361437

Obama's economic activism questioned msnbc.msn.com Some economists, lawmakers fear policies are sowing uncertainty By Tom Raum The Associated Press updated 11:24 p.m. CT, Sat., March. 7, 2009 WASHINGTON - President Barack Obama offered his domestic-policy proposals as a "break from a troubled past." But the economic outlook now is more troubled than it was even in January, despite Obama's bold rhetoric and commitment of more trillions of dollars. And while his personal popularity remains high, some economists and lawmakers are beginning to question whether Obama's agenda of increased government activism is helping, or hurting, by sowing uncertainty among businesses, investors and consumers that could prolong the recession. Although the administration likes to say it "inherited" the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama's still-young watch. Every day, the economy is becoming more and more an Obama economy. More than 4 million jobs have been lost since the recession began in December 2007 — roughly half in the past three months. Stocks have tumbled to levels not seen since 1997. They are down more than 50 percent from their 2007 highs and 20 percent since Obama's inauguration. The president's suggestion that it was a good time for investors with "a long-term perspective" to buy stocks may have been intended to help lift battered markets. But a big sell-off followed. Presidents usually don't talk about the stock market. But the dynamics are different now. A higher percentage of people have more direct exposure to stocks — including through retirement plans — than ever. So a tumbling stock market is adding to the national angst as households see the value of their investments and homes plunge as job losses keep rising. Some once mighty companies such as General Motors and Citigroup are little more than penny stocks. Many health care stocks are down because of fears of new government restrictions and mandates as part a health care overhaul. Private student loan providers were pounded because of the increased government lending role proposed by Obama. Industries that use oil and other carbon-based fuels are being shunned, apparently in part because of Obama's proposal for fees on greenhouse-gas polluters. Makers of heavy road-building and other construction equipment have taken a hit, partly because of expectations of fewer public works jobs here and globally than first anticipated. "We've got a lot of scared investors and business people. I think the uncertainty is a real killer here," said Chris Edwards, director of fiscal policy for the libertarian Cato Institute. Some Democrats, worried over where Obama is headed, are suggesting he has yet to match his call for "bold action and big ideas" with deeds. Treasury chief under fire In particular, they point to bumpy efforts to fix the financial system under Treasury Secretary Timothy Geithner. Obama may have contributed to the national anxiety by first warning of "catastrophe" if his stimulus plan was not passed and in setting high expectations for Geithner. Instead, Geithner's public performance has been halting and he's been challenged by lawmakers of both parties. Republicans and even some top Democrats, including Rep. Charles Rangel, chairman of the House Ways and Means Committee, have questioned the wisdom of Obama's proposal to limit tax deductions for higher-income people on mortgage interest and charitable contributions. Charities have strongly protested, saying times already are tough enough for them. The administration suggests it might back off that one. Even White House claims that its policies will "create" or "save" 3.5 million jobs have been questioned by Democratic supporters. "You created a situation where you cannot be wrong," the chairman of the Senate Finance Committee, Montana Democrat Max Baucus, told Geithner last week. "If the economy loses 2 million jobs over the next few years, you can say yes, but it would've lost 5.5 million jobs. If we create a million jobs, you can say, well, it would have lost 2.5 million jobs," Baucus said. "You've given yourself complete leverage where you cannot be wrong, because you can take any scenario and make yourself look correct." Republicans assert that Obama's proposals, including the "cap and trade" fees on polluters to combat global warming, would raise taxes during a recession that could touch everyone. "Herbert Hoover tried it, and we all know where that led," says House Republican leader John Boehner. The administration argues its tax increases for the households earning over $250,000 a year and fees on carbon polluters contained in its budget won't kick in until 2011-2012, when it forecasts the economy will have fully recovered. But even those assumptions are challenged as too rosy by many private forecasters and some Democratic lawmakers. Many deficit hawks also worry that the trillions of federal dollars being doled out by the administration, Congress and the Federal Reserve could sow the seeds of inflation down the road, whether the measures succeed in taming the recession or not. The money includes Obama's $3.6 trillion budget and the $837 billion stimulus package he signed last month. To the notion that he favors a government-operated approach toward fixing problems, Obama says none of it started on his watch — the collapsing economy or the taxpayer-funded bailouts designed to keep matters from getting even worse. "By the time we got here, there already had been an enormous infusion of taxpayer money into the financial system," he said in an interview posted Saturday on The New York Times' Web site. "And the thing I constantly try to emphasize to people if that coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system." Obama said: "I did think it might be useful to point out that it wasn't under me that we started buying a bunch of shares of banks. It wasn't on my watch. And it wasn't on my watch that we passed a massive new entitlement — the prescription drug plan without a source of funding." He said his administration has " been operating in a way that has been entirely consistent with free-market principles" and some of his critics can't say that. 'Political capital' Polls show that Obama's personal approval ratings, generally holding in the high 60s, remain greater than support for his specific policies. "He still has a fair amount of political capital, so the public is willing to cut him some slack and go along with him for a while," said pollster Andrew Kohut, director of the Pew Research Center. "But the public will have to get some sense that the kinds of things he's proposing are going to work, or are showing some signs that they are working." Allan Sinai, chief global economist for Decision Economics, a Boston-area consulting firm, said the complexity and enormity of the crisis make it hard to solve. "There's no way to get it all right, regardless of which president is making policy," Sinai said. "The problem is the sickness got too far. The actions taken, medicine applied, were mainly the wrong actions. So it's just worse, and it gets harder to deal with. At this stage, there is no easy answer, no easy way out. It's a question of how we fumble through." Copyright 2009 The Associated Press.

To: altair19 who wrote (162442)	3/8/2009 11:30:40 PM
From: stockman_scott	Respond to of 361437

Stryker has demographics and valuation on its side. forbes.com Forbes Stock of The Week Replacement-Joint Juggernaut By John Dobosz 03.05.09 When the government is buying banks and talking about raising taxes during the depths of an already bad recession, investors are understandably not in much of a mood for risking their capital in the financial markets. Many investors realize, however, that it is precisely at times like these, when the outlook is so dire, that you can buy quality companies at modest prices. Combining that well-founded sense of risk aversion with a nod to the opportunities that likely await bold investors when the market is tanking, Richard Moroney, editor of Dow Theory Forecasts and the small- and mid-cap focused Upside newsletter, recommends buying joint-replacement specialist Stryker Corp... "Founded in 1941, Stryker has leading market positions in artificial joints, such as prosthetic hips and knees, and hospital equipment," says Moroney in a recent issue of Dow Theory. "Stryker, a defensive company in a defensive industry, has $2.20 billion in cash, or $5.32 per share, and no long-term debt. Stryker is being upgraded to a buy and a long-term buy." Says Moroney: "The orthopedic-implants business accounted for 59% of sales in 2008. Annual revenue climbed 9% at constant currency on growth from knee implants (up 15%), spinal implants (up 17%) and trauma products (up 12%). Medical and surgical equipment, such as medical drills, video cameras and specialty stretchers, account for the remaining sales. Equipment revenue rose 6% at constant currency in 2008." He continues: "Stryker generates 36% of sales overseas, making it susceptible to currency fluctuations. A strong dollar reduced overall sales growth by 4% in the December quarter and could provide a similar drag this year if exchange rates hold. Operating cash flow advanced 14% in 2008, while free cash flow rose 18%. Stryker used some of that cash to boost its annual dividend, payable in January, for a 15th straight year. A strong balance sheet gives Stryker the flexibility to spend heavily on research and consider acquisitions, though management says it will avoid burdening the company with heavy debt obligations." Stryker management has forecast per-share earnings growth of 10% to 14% in 2009, stronger than the consensus projection of 10% growth. "The company says it believes cost controls and product launches can support long-term growth of 15%," says Moroney. "In the current environment, both targets look challenging, though not out of reach for such a consistent grower." Stryker may not escape the downturn unscathed, since hospitals are cutting spending on new equipment, and patients are postponing elective treatments. "Even if Stryker's guidance proves somewhat optimistic, the stock still appears cheap. Shares trade at 14 times the lowest 2009 estimate, well below the five-year average forward price/earnings ratio of 34. While a return to the five-year average valuation seems unlikely in the next year or so, a combination of modest P/E multiple expansion and double-digit profit growth should drive market-beating returns over the next two years."

To: altair19 who wrote (162442)	4/1/2009 10:58:58 PM
From: stockman_scott	Read Replies (1) \| Respond to of 361437

Madoff Victims File to Put Him Into Bankruptcy By Linda Sandler April 1 (Bloomberg) -- Victims of Bernard Madoff’s $65 billion Ponzi scheme filed a petition to put the fraudster in personal bankruptcy to ensure that all his assets are used to pay them, the victims’ lawyer said. “It’s an important step to ensure that all Madoff assets are brought before the bankruptcy court to be used for victims of this massive fraud,” said Jonathan Landers, a lawyer with Milberg LLP, which represents more than 70 victims, in a phone interview. Madoff, 70, who pleaded guilty March 12 to defrauding investors by using money from new ones to pay off old ones in a Ponzi scheme and is now in jail, isn’t in bankruptcy though his firm, Bernard L. Madoff Investment Securities LLC, is being liquidated by the Securities Investor Protection Corp. Federal prosecutors have identified more than $100 million in real estate, cash, bonds, art, autos, boats and other property owned by Madoff and his wife, Ruth, which they said in March they intend to seize. The couple’s Palm Beach residence, a yacht and a smaller boat were seized today by the U.S. Marshals Service, the Miami Herald reported. Ruth Madoff successfully applied for a homestead exemption under Florida law to declare the Palm Beach home as a primary residence and shield it from creditors. Three creditors petitioned to put Madoff into bankruptcy, according to a copy of the document provided by Milberg: Blumenthal & Associates, with a claim of $30.2 million, Martin Rappaport, claiming $20.8 million, and a trust bearing his name, which claimed $8.3 million. A judge must approve their request before the victims may formally seek to force Madoff into bankruptcy. Madoff’s lawyer, Ira Sorkin, couldn’t immediately be reached by phone or e-mail. The SIPC case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net. Last Updated: April 1, 2009 20:27 EDT

To: altair19 who wrote (162442)	4/2/2009 1:04:00 AM
From: stockman_scott	Respond to of 361437

Startup IPO Drought Is Longest for at Least 38 Years By Tim Mullaney April 1 (Bloomberg) -- No startups staged initial public offerings for a second quarter in a row, marking the first time in at least 38 years that six months have passed without an IPO of a venture-capital-backed company. The market for selling startup companies also fell by about half last quarter, the National Venture Capital Association said in a report today. Mergers fell to 56 deals from 106 in the same period last year. The average value of sales where prices were disclosed fell to $49.6 million from $113.6 million. The collapse of the two main ways for venture capitalists to cash in is inhibiting the market for new investments, NVCA president Mark Heesen said in an interview. The quarter brought signs the situation may get worse, he said. Six venture-backed companies that had planned to go public withdrew their regulatory filings during the quarter. “It’s that bad because there is simply no confidence among the investing public,” Heesen said. “Everyone is looking for stability and no one has found it yet.” The quarter was the third in the past five with no venture- backed IPOs, NVCA said. Only six venture-backed startups went public in 2008. The last, computer services company Rackspace Hosting Inc., sold shares for $12.50 each in August and closed yesterday at $7.49 in New York Stock Exchange composite trading. The six-month period with no venture-backed IPOs is the first since the NVCA began collecting data in 1971, Heesen said. Money-Losing Investments “That’s why they call it venture capital,” said Lise Buyer, a former venture capitalist and technology analyst who consults companies considering IPOs. “It doesn’t always work.” The merger market may be even more discouraging, Heesen said. Of the 13 mergers last quarter whose values were announced, seven brought prices that were less than venture capitalists had invested. Only three commanded more than four times the sum invested, and none fetched 10 times that. Venture firms rely on isolated big payoffs to offset the many startups that fail, Heesen said. “It comes down to making your limited partners want to stay in venture capital, and if you don’t have acquisitions and IPOs you’re not going to satisfy them,” Heesen said. “This has to change.” Venture capitalists are telling their backers to be patient, said Matt McIlwain, managing director at Seattle-based Madrona Venture Group. His firm is also paying less for its investments, and is providing follow-up funding to its existing companies if they have trouble getting growth capital from other venture investors. Investors Unconvinced Acquisitions are being held back by the startups’ inability to convince buyers that they can meet growth forecasts, McIlwain said. And acquirers know they have all the leverage in merger talks, he said. “In a market where people don’t know if they’ll make the next quarter, you can’t get them excited about 18 to 24 months,” McIlwain said. “We know that the corporate- development departments of large companies have bottom-fishing initiatives and mandates under way.” The IPO market often reacts to economic turmoil by declining more than stocks overall, said Francis Gaskins, publisher of the IPO Desktop newsletter in Marina del Rey, California. This slowdown was worsened by the speed and breadth of the economic decline last year, he said. “There’s a contraction of both consumer and business activity,” Gaskins said. “This whole thing happened so quickly over the last 18 months that IPOs went over a cliff. And there’s global overcapacity that made everything worse.” The IPO bust’s impact on investment in startups began to show up last year. Fourth-quarter investments in new companies dropped 33 percent to $5.4 billion. NVCA is set to release first-quarter numbers April 18. Venture investment in so-called clean technology companies, which had been growing at more than 50 percent the past two years, fell 48 percent in the first quarter, the accounting firm Deloitte and the consulting firm Cleantech Group reported today. To contact the reporter on this story: Tim Mullaney in New York at tmullaney1@bloomberg.net Last Updated: April 1, 2009 14:55 EDT

To: altair19 who wrote (162442)	4/2/2009 1:12:55 AM
From: stockman_scott	Respond to of 361437

Envisioning the Cloud: The Next Computing Paradigm marketspaceglobal.com

To: altair19 who wrote (162442)	4/2/2009 2:49:22 AM
From: stockman_scott	Respond to of 361437

No Man Is an Island: The Promise of Cloud Computing knowledge.wharton.upenn.edu Published: April 01, 2009 in Knowledge@Wharton "Cloud computing" promises myriad benefits -- including cost savings on technology infrastructure and faster software upgrades -- for users ranging from small startups to large corporations. That's an auspicious future considering that not everyone agrees on exactly what cloud computing is or what it can do. Despite the ethereal name, in its broadest terms, the concept of cloud computing is fairly simple. Rather than running software on its own computers -- "on premises" as the terminology goes -- a company buys access to software on computers operated by a third party. Typically, the software is accessed over the Internet using only a web browser. As long as the software performs properly, it doesn't matter where the systems that run it are located. They are "out there somewhere" -- in "the cloud" of the Internet. Since companies tend to purchase access to this remote software on a subscription basis, cloud computing is also often termed "software as a service." "Cloud computing refers to a number of trends related to pushing computing resources -- hardware, software, data -- further into the network," said Kartik Hosanagar, a Wharton professor of operations and information management who moderated a panel discussion on cloud computing at the 2009 Wharton Business Technology Conference. These days, no computer user is an island. A recent study determined that 80% of the data used by business comes from outside the company. Cloud computing "is the technical response to this reality," said panel participant Anthony Arott of anti-virus software company Trend Micro, based in Cupertino, Calif. A somewhat broader definition of cloud computing comes from another expert on that panel, Barry X. Lynn, CEO of "cloud platform" provider 3tera of Aliso Viejo, Calif. "A lot of people define the cloud as having the computers be someplace else. And that's not true," he said. "People have run IT in data centers they didn't own for years. In the 1970s, we called that 'remote job entry.' In the 1990s, it was 'outsourced data centers.' It's not a new concept." Lynn suggested that true cloud computing isn't simply about adding physical distance between the user and the computer that's doing the grunt work. What's new is "when you abstract the computer from the physical resources." In other words, you no longer have specific machines -- no matter where they are located -- dedicated to specific functions or software applications. Instead, you have a piece of software running across a pool of machines, making optimal use of all the available hardware resources. In between these explanations of cloud computing lies a variety of products and services, all of which claim to offer a number of advantages -- lowered investment in hardware, more efficient use of computing systems in existing data centers, easier scale-up of the applications and services. These approaches are now possible due to faster and more pervasive communications. As bandwidth has become cheap and readily available, and transmission speed is no longer an impediment, it's possible to store data and run software anywhere for users to access from wherever they want. Backing (Up) Consumers According to Prasanna Krishnan, an associate at Menlo Park, Calif.-based venture capital firm Draper Fisher Jurvetson and also a panelist at the Wharton conference, the easiest examples for most people to grasp may be consumer web applications such as Microsoft's Hotmail, Google's Gmail and YouTube, and Yahoo's Flickr photo-sharing service. Consumers run only their browsers on local computers. The rest of the software -- along with users' email messages, photos or videos -- are on remote machines the user can't see and doesn't have to know anything about -- as if hidden in the clouds. Another conference panelist, Vance Checketts, general manager of Decho, based in Pleasant Grove, Utah, described his company's service, Mozy, as a "cloud" offering. Mozy lets users back up their home computer data online. "We have 18 petabytes [18 million gigabytes] backed up now across about a million users. It's cloud technology, but Mozy got started with just a bunch of cheap off-the-shelf disks." Google extended its successful webmail model by introducing Google Docs -- online versions of word processor and spreadsheet applications, software that traditionally runs on users' PCs. It is joined in that market by others, including Zoho, of Pleasanton, Calif., which offers a suite of online collaboration and business applications. These convenient online tools have helped to fuel the market for netbooks -- lightweight portable computers which contain minimal data storage and computing capacity, and carry price tags usually under $400. By taking advantage of online applications and storage, users have the option to spend less money on hardware. Reducing -- or eliminating -- hardware and other operating costs naturally also appeals to corporate users, many of whom are moving toward subscription-based "software as a service" (abbreviated SaaS). Online business applications offered by companies such as Salesforce.com (for customer relationship management) and Workday (for human resources and financial software) can not only replace expensive programs that would run on companies' premises, they can reduce the need for corporate computer servers and the related costs of maintaining them. With SaaS, companies pay subscription fees for usage rather than licensing costly enterprise software. SaaS is a growth industry: A new study by Forrester Research concludes that even in the current recession, software-as-a-service providers are seeing double-digit growth in their subscription revenue. Ariba, a Sunnyvale, Calif.-based procurement software-as-a-service company that had been left for dead after the Internet bubble burst, saw a 73% jump in its subscription revenue, from $18.8 million in the third quarter of 2007 to $32.6 million in the same period in 2008. Other companies have expanded into the cloud by offering data-center resources as more generic "computing as a service." Google, which maintains vast warehouses of servers to run its own software applications, also offers a service called Google AppEngine that allows businesses to develop and run their own programs on Google's servers. Amazon has a similar offering called the Elastic Compute Cloud, or EC2. These services offer companies a place to host applications and data under a pay-for-usage model -- called "utility computing" because it is ready on demand, just like turning on the lights or the water faucet. Customers pay by unit of consumption, whether it's storage space or computing time, and can scale usage up or down quickly. These computing services are particularly attractive when companies want to develop and test new applications without interfering with existing systems, and they can offer "hot," or ready-to-use, backups of the applications in use. Back to the Future The notion that a company has a "private cloud" on its premises might seem contrary to the concept of cloud computing, but cloud-like features can also have advantages in corporate data centers. Lynn from 3tera gave a historical analysis of how computing architectures evolved. Decades ago, he said, "you had a giant mainframe, and everything ran on it. If you ran out of capacity, you would either make it bigger or get another giant mainframe." Then, client/server systems came along to distribute processing between central computers or servers and the PCs at users' desks. Still, however, every machine in the data center had to be dedicated to a specific software function or application. The newer technology of virtualization permits one piece of hardware to act as multiple "virtual machines" and be dedicated to multiple functions. This makes more efficient use of hardware, but each virtual machine still must be dedicated to a specific software function. "What cloud computing really changes is [that] now you don't have specific machines, or virtual machines, dedicated to specific functions. You have a pool of machines. Anything can run anywhere" -- even in a company's private data center, Lynn said. Traditional corporate data centers can be inefficient. Businesses equipped for peak workloads may have servers that are underutilized much of the time. In a private cloud, a group of a company's existing computers can be brought together as a computing pool -- and an application "can just grab any available hardware and then give it back," said Lynn. "The term we use is 'disposable information technology infrastructure.'" The software from 3tera acts as a conductor, parceling out components of an application to different computers in a cloud like a taxi dispatcher. "There is no architectural reason why you can't have 20 different machine types" involved, Lynn noted, although performance is optimized if the machines are similar. For some corporate users, keeping the cloud in-house alleviates the security and privacy concerns that can come with running key applications and data outside the company. However, cloud providers insist that data is safer and less vulnerable with them. Companies that provide storage and computing services maintain state-of-the-art facilities and implement security updates immediately. Lynn believes that eventually IT "will evolve to an almost completely external cloud," and he sees it as a natural progression. "If you're in the health care business, or financial services or manufacturing, why would you ultimately be spending hundreds of millions or billions of dollars on IT infrastructure? And the answer is, you've had no choice," he said. "If you woke up this morning and read in The Wall Street Journal that, say, Overstock.com has stopped using UPS and FedEx and the U.S. mail, and had bought fleets of trucks and started leasing airport hubs and delivering products themselves, you would say they were out of their minds. Why is that much more insane than a health care company spending $2 billion a year on information technology?" Panelists at the Wharton conference encouraged students in the audience to take advantage of cloud computing as entrepreneurs. Those thinking of offering innovative online services -- in the hopes of becoming the next Facebook or Twitter -- will need a way to ramp up their capacity quickly if all goes well. With a cloud-based service, expansion capacity is as close as you can get to unlimited, panelists noted. Money is a factor, too, of course. A startup of any type can get the bulk of its computing resources on a pay-as-you-go basis, said Wharton's Hosanagar. "You don't have to worry about these big up-front fixed costs. I've had student startup companies on minuscule budgets." Added panelist Jonathan Appavoo, a research scientist at IBM: "Startups are the killer app for the cloud. As students with a good idea, this is a playground. You can be the driver of all this stuff. Computation now is so accessible, and we have an opportunity to dramatically change how things work."