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Technology Stocks : Y2K (Year 2000) Stocks: An Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: C.K. Houston who wrote (9172)	1/25/1998 9:22:00 PM
From: Risky Business	Respond to of 13949

Labor shortage makes Yr 2000 problem costly to fix By Ruth Morris NEW YORK, Jan 23 (Reuters) - A dearth of workers available to tackle the Year 2000 computer glitch will push costs for fixing the problem higher as the clock ticks toward the new millennium, experts say. As companies roll up their sleeves and dive into the tasks of finding and correcting computer code, concern is mounting that the work force needed to handle the problem is becoming harder to come by, and harder to retain. One measure of the shortage is that city newspapers now bulge with page upon page of want-ads looking for technology experts. While not all those ads correspond to the millennium bug, they often pull from the same labor pool. ''Just the IT (information technology) section alone in Sunday's Washington Post had 84 pages of ads,'' said Mark Uncapher, an advisor to the Information Technology Association of America. ''That was as thick as I've ever seen it.'' Uncapher noted that much of the work involved in fixing the millennium bug is time-consuming, thankless labor, and that freshly-trained staff might be tempted away. The Year 2000 bug, or ''Y2K'' problem, refers to a long-standing programming technique that records the year using only the last two digits of the number, with the prefix ''19'' presumed. As a result, many date-sensitive programs will put a ''19'' in front of the ''00'' that corresponds to the year 2000, misreading the year as 1900. Unless routed out and corrected, the problem could snag any number of computer transactions, from calculating interest on loans to figuring expiration dates on medical prescriptions. So marked is the labor shortage to fix the problem that some consultants are issuing guidelines to ensure that Year 2000 staff will stay around to see remediation projects to the end. And most of those measures involve additional expense. ''I would over-compensate the army,'' said George Colony, president of research firm Forrester Research Inc (FORR - news), of the ranks of programmers already toiling to overcome the Year 2000 bug. Forrester urges companies to orchestrate 'crash course' training programs to reassimilate employees when they've finished their millennium work and to offer project managers the opportunity to earn wages above their expectations. While some companies have set up in-house training courses to meet their needs, others are relying on ''outsourcers''-- companies that specialize in providing computer services. ''You will not be able to get an outsourcing contract this time next year with a high-level contractor,'' Colony forecast at a recent conference in New York. As a result, outsourcers will be able to demand top dollar for their expertise, he said. Forrester estimates that service revenue for outsourcers working on the millennium bug will peak at $20 billion in 1999, before dropping back to roughly $15 billion in 2000. That compares with only $12.5 billion in 1997. Colony also predicted that companies that only begin looking for Year 2000 staff in July or August ''won't get the people.'' And with remediation costs expected to rise, securities experts are looking for Year 2000 expenditures to spill over onto earnings reports. ''It's going to be a defining business issue of 1998 and 1999,'' said Dennis Grabow, chief executive of financial advisory firm Millennium Investment Corp. Not only do non-compliant companies risk losing customers, they may run into problems raising capital as banks probe more deeply into compliance as a loan requirement. Grabow said he would look to the banking and securities industries for an early indication of the problem because federal regulators are pushing those sectors to begin testing their corrected systems this year. --------------------------------------------------------------------------------

To: C.K. Houston who wrote (9172)	1/27/1998 12:54:00 AM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 13949

Notes from the Y2K Conference on Friday in NYC - Part 1: Ed Yardeni Disclaimer: I am not a reporter and I have horrible handwriting so everything I am writing here from my notes is to the best of my limited ability (gg). Ed immediately got my attention by saying he used to be an assembly language programmer! He then gave the timeline for the events leading up to the day the SEC issued their staff opinion (as opposed to a ruling or regulation) that companies should give specifics (as opposed to boilerplate) about their Y2K situation. Ed reiterated his oft-quoted pronouncement that he has seen enough to conclude there is a 40% probability of a Y2K induced recession as severe as the one in '73-'74. He likens the disruption of the flow of oil to the disruption of the flow of information. Because of the Asia crises, he forecasts that after the OMB issues their quarterly report on 3/15, he will up his probability for a recession to 60%. He thinks the days for a bull market are numbered, but that in the short term we may very well see new highs. However, if investors start seeing risk in SEC filings, the recession could hit as early as '99. Ed joked about the Feds testifying they are prepared to handle the Y2K crises because they have had experience with natural disasters like hurricanes. Ed said the Feds don't know how to operate a paper-based system. The #1 concern he has about Y2K is that related problems will limit the supply of electricity. Unlike, for example, ice storms that affect one part of the country, Y2K will be systemic. Thus, if Union Pacific has problems, trains won't be able to get the coal to the various plants that need it. As for nuclear plants, he is not worried about safety problems; he is worried about what would happen if they don't have enough electricity to run, something for which the NRC does not concern itself. The #2 concern is the FAA. Ed mentioned the story about how IBM told the FAA that the 40 mainframes it gave them that run air traffic are not Y2K compliant. No sense focusing on the software problem here since the cooling system is date sensitive and come 2000 it will stop working and melt down the system anyway! He also predicts that the inability for other countries to correct their Y2K problem will result in no-fly zones around the world. Lloyds may not insure some airlines in 2000 and concerned pilots are meeting around the world. #3 is Social Security and the IRS. Social Security had the foresight in '89 to start working on their 30M lines of code and predict they will be done next year. Problem is, they just recently found another 30M lines of code they didn't know they had! You can do the math about when they might be fixed. Ford, BAT Industries and a total of 60 major companies signed a statement to Clinton and the Prime Ministers of Britain and Canada that they were reasonably sure businesses would do OK, but that they don't feel the same way about government, but that because the two interact they might also have problems. Perhaps the government might not be able to pay for necessary code remediation and therefore might be forced to create a national sales tax. Ed says Credit Unions, where 1 in 4 people have their money, are woefully behind. In the Q&A, Ed was asked about media coverage and he said when he wrote an article supporting Bennet's bill, the Wall Street Journal would not take it whereas the NY Times printed it right away. He also likes the coverage in the Financial Times and noted that the International Herald Tribune has picked up some Y2K related stories from the Times. Lastly, he thinks bonds will outperform stocks over the next three years, although, as he said earlier, the market might do quite well short term. - Jeff