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

To: Peach who wrote (12406)	7/18/1998 8:04:00 PM
From: CalculatedRisk	Read Replies (3) \| Respond to of 13949

Dr. Yardeni is a well respected economist. But IMO he is very wrong about Y2K. yardeni.com In his Harvard Business Review article, Dr. Yardeni makes several errors that demonstrate his lack of understanding about business and IT. First, he borrows trouble. Although I agree that companies should plan to minimize disruptions in the year 2000, it is a novice error (Yardeni is an economist, not a business person) to attempt to plan for everything! Capt. Kirk didn't plan for every possibility ... How could he? But he did know how to react in an emergency. But Yardeni is really off base when he writes: "The Y2K crisis is occurring because top management has ignored IT." What evidence does he have that Y2K is a "crisis"? And what evidence does he have that management has "ignored IT"? If he suggested that Y2K may become a "crisis" or if he characterized Y2K as a "significant problem", I would agree. Many Y2K pessimists have pointed to the "slow" action on the part of many companies to justify their claims of management ignoring Y2K. In addition, these pessimists have argued that companies will be resource constrained and cannot possibly solve their Y2K problems. These pessimists are wrong on both counts. Yardeni would understand this argument: Y2K is a non-productive overhead expense. As such, these expenditures have been delayed (appropriately) as long as possible (simple concept: time value of money). Companies and government are now addressing the issue in earnest, and making tremendous progress. Even Yardeni points out that most companies believe that they have the problem "well in hand". And with regards to resource constraints, most companies have reported spending about 10% of their IT budget on Y2K. Obviously, these companies can double or triple (or more) the resources spent on Y2K, without bringing in additional outside help. But what about government agencies? Hasn't Rep. Horn given the Federal Government an "F" for their Y2K efforts? Well, yes, he has ... and he is wrong. Anyone interested in the discrepancies between Horn's statements and reality can review the actual Y2K data at: cio.gov Everyone can see (except possibly Rep. Horn <g>) that the federal government has made tremendous progress in the last six months and that they have even accelerated their time schedule! My intent is NOT to minimize the significance of Y2K ... it is a significant problem. Nor is it my intent to completely dismiss Dr. Yardeni's arguments; as I wrote, he is a well respected (and deservedly so) economist. And he may be correct about the recession in 2000, but IMO for the wrong reasons. Fear of Y2K (withdrawing money from banks, selling all stocks, etc.) could send the economy into a recession. And the significant expenditures on non-productive Y2K work will definitely slow the growth of the economy. Heck, even the continuing problems in Asia could spread to the United States. But lets not borrow trouble - the ATM systems will work, electricity will flow and airplanes will not fall from the sky! Regards, Bill