Message-ID: <32273062.1075845228412.JavaMail.evans@thyme> Date: Fri, 25 May 2001 14:10:53 -0700 (PDT) From: info@gildertech.com To: gilder-technology-report@earth.lyris.net Subject: [gilder-technology-report] Friday Letter 9.0 Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: info@gildertech.com@ENRON X-To: Gilder Technology Report X-cc: X-bcc: X-Folder: \Lewis, Andrew H.\Lewis, Andrew H.\Inbox X-Origin: LEWIS-A X-FileName: Lewis, Andrew H..pst ==================================================== from Gilder Publishing THE FRIDAY LETTER e-mailed weekly, for friends and subscribers ==================================================== | www.gilder.com | Issue 9.0/May 25, 2001 HEADLINES: * In New Economy Watch/Snowflakes or Scuds? * In The American Spectator/Hack This * Friday Feature/Raving Loony Supply-Siders * Memorial Day Special/Dead Media Project * Poll Question/What's the Problem Here? * Quoted: Bill Gates * Readings/Three-Day-Weekend Special! * Conference Calendar ~~~~~~~~~~~~~~~ IN NEW ECONOMY WATCH/Snowflakes or Scuds? "If the mainstream press is right, now is a good time to keep your money--at least, the portion of it that you allocate to the telecommunications carrier and service provider industries--under the mattress. There's a house of cards that's about to come crashing down, and you don't want to be anywhere near the neighborhood. "Telecom Debt Debacle Could Lead To Losses Of Historic Proportions!" shouted page C1 of the May 11 Wall Street Journal, capping a wild month of "Can You Top This?" financial headlines. The Journal story followed close on the heels of "Telecom Meltdown," an April 23 Business Week Special Report, a pair of Barron's pieces featuring or highlighting Susan Kalla, the "Dr. Doom Of Telecommunications," and a widely read TheStreet.com interview with former Lehman Brothers' bond analyst Ravi Suria, who boldly predicted that "80% of the New Economy telcos will have to restructure." Kalla and Suria, not surprisingly, recommend that investors steer well clear of both the stocks and the bonds of telecommunications companies. "The Journal says that the telecom shakeout is "shaping up to be one of the biggest financial fiascoes ever," citing $650 billion in debt financing over the "past few years." Barron's counts $322 billion in such financing over the past three years, and Business Week ($700 billion) suggests ominously that "the end of the dark days of telecom...are still a long way off." If those big numbers aren't scary enough, the Journal is there to remind us that "in the past six months, about ten telecom providers have filed for bankruptcy." The implication is that dozens more are set up to follow in their footsteps. If you want to hear their names repeated over and over again in that context, just turn on the television. "Take a few spectacular corporate flameouts, add a relentless flow of reportorial negativity, throw in some fire-and-brimstone preachiness--from Wall Street, of all places--about purging excesses (whatever those are) and punishing profligate offenders, and you wind up with an investor class that behaves like Mark Twain's cat; which, having once found itself aboard a hot stove, would not only never visit a hot stove again, but wouldn't dare jump on a cold one either. "Should you follow the cats? To mix up our menagerie a bit: can you count on Chicken Little to tell a Scud from a snowflake?" Jeff Stambovsky takes on telecom debt, the bond market and bandwidth bears in the May 2001 edition of New Economy Watch. Subscribe now, at www.neweconomywatch.com. ~~~~~~~~ IN THE AMERICAN SPECTATOR/Hack This "Before all else, I must establish two facts: first, I am a 'hacker'--i.e., someone who knows and enjoys computer programming. Second, I grew up in Europe. Owing to one of the sillier rules of political correctness, 'speaking as a Hungarian-born hacker,' I have now the authority to say all kinds of critical things about the Finnish Pekka Himanen and his new book 'The Hacker Ethic.' "On the other hand, I also work at Microsoft, which, according to the book, is the 'computer hacker's number-one enemy.' This, by the same rules, would disqualify me as hopelessly biased. So let's just suspend the rules, and I'll say what I think." June 2001's American Spectator is on newsstands now, featuring Brian Wesbury on Alan Greenspan, Joe Queenan on Boomer funerals and Art Laffer's strong buy on Japan. Oh, and an interview with someone named George Gilder. Plus Microsoft Distinguished Engineer Charles Simonyi's unhedged dissection of the open-source software scene, Rich Karlgaard on venture capital and a cover girl who'll never be confused with Hillary Clinton. Read the full text of Simonyi's review at www.gilder.com and subscribe online at 50% off the annual cover price. ~~~~~~~ FRIDAY FEATURE/Raving Loony Supply Siders "High marginal tax rates distort work and savings decisions, and promote unproductive tax avoidance and evasion activities. These tax distortions create 'deadweight losses,' which lower the nation's standard of living. Each $1 of marginal tax rate cuts would save the private economy at least $1.25 as deadweight losses fall and economic efficiency increases." More ravings from the supply side? Actually it's a rare blast of fresh air from Capitol Hill-"The Economic Benefits of Personal Income Tax Rate Reductions," published last month by the Joint Economic Committee, Senior Economist Chris Edwards presiding. Your tax dollars at work! Get a free copy at http://www.house.gov/jec/tax/taxrates/taxrates.pdf . (Thanks to our excellent friend Amity Shlaes at the Financial Times, who tipped the report in her "After Tax" column, http://globalarchive.ft.com/globalarchive/articles.html?id=010517001720&query=shlaes. And while we're at it, don't miss Amity's big-picture interview this week with Treasury Secretary Paul O'Neill-the full transcript is at http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3RQSMP0NC&live=true.) ~~~~~~~~~~~~~~~~ MEMORIAL DAY SPECIAL/Dead Media Project Let's hear it for the Phenakistoscope! Or how about the Teleharmonium? Or mirror telegraphy, aka the Heliograph, the Helioscope, the Heliostat, the Heliotrope. And who can forget McDonnell Douglas Laserfilm player? Or the Inca Quipo. And of course--really--missile mail. The Dead Media Project is an ever-expanding database of, well, dead media. Television isn't there yet, but the early Baird mechanical version is (full instructions included), along with the Vocoder, the Spartan code stick, a complete list of deceased PC platforms and pneumatic typewriters. Loosely maintained by science-fiction--okay, cyberpunk--eminence Bruce Sterling and powered by a global network of volunteers, it's the kind of ramshackle monument to unfettered communication that makes Web pioneers misty. The "table of categories" alone is a geek feast. There is no way adequately describe this. The good news is that we don't have to--it's at http://www.deadmedia.org. ~~~~~~~~~~~~~~~~ THIS JUST IN/Gilder.com Poll Results 18-25 May 2001 Question: Are we in a tech slump, a business-cycle slump, or a policy slump? Tech: 41% Business cycle: 28% Policy: 31% Up next: Television is toast-yes/no? Weigh in at www.gilder.com. ~~~~~~~~~~~~~~~ QUOTED: Non-Compete "Intellectual property has an interesting problem, which is that it lasts forever. Your own installed base is serious competition." Microsoft Chairman Bill Gates, in News.com, 23 May 2001 http://news.cnet.com/news/0-1003-200-6021517.html (Thanks to Owen Thomas at Ditherati. Sign up for a free daily quote feed at www.ditherati.com.) =-=-=-=-=-==-=-=-=-=advertisement =-=-=-=-=-=-=-=-= Get a FREE Trial Issue of Forbes! Special online offer--click on the URL below to order today. https://commerce.cdsfulfillment.com/FRB/subscriptions.cgi?IN_Code=IK03FTA =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= READINGS/Three-day-weekend special edition! Chipmaster Chang http://www.economist.com/business/displayStory.cfm?Story_ID=627473 BT's Setting Sun http://www.thestandard.com/article/0,1902,24619,00.html?nl=mg Vivendi: Content, C'est le Roi http://interactive.wsj.com/articles/SB990655409508091533.htm (subscription required) IBM Unwired http://www.internetworld.com/news/archive/05222001a.jsp No Cheers for Lucatel http://www.nytimes.com/2001/05/24/technology/24LUCE.html (registration required) Ericsson: Beaten, Unbowed http://www.internetworld.com/news/archive/05242001a.jsp PDA Phones: Mutts v Purebreds http://www.internetworld.com/051501/05.15.01mcomm2.jsp Excite@Home's Dream House http://www.internetworld.com/news/archive/05212001c.jsp Game Wars http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3BIKQ9WMC&live=true Network Robots http://globalarchive.ft.com/globalarchive/articles.html?id=010516001465&query=kehoe+islam Baby Bells Broadband Bill Unravelling http://interactive.wsj.com/articles/SB990485158327857143.htm (Paid subscription required.) ISPs Wary on AOL Rate Hike http://news.cnet.com/news/0-1005-200-6007412.html No Blue Skies Yet for Nukes http://www.economist.com/printedition/displayStory.cfm?Story_ID=623959&CFID=135993&CFTOKEN=68517730 Thinking About the Intangible http://www.nytimes.com/2001/05/22/business/22ACCO.html?searchpv=site02 (registration required) Hacker-Trackers Quit http://www.msnbc.com/news/576633.asp 110-volt Networking http://www.zdnet.com/anchordesk/stories/story/0,10738,2763738,00.html I Want My MP3 http://www.nytimes.com/2001/05/22/technology/22MUSI.html (registration required) Andy Grove Unpligged http://www0.mercurycenter.com/local/center/qagrove0523.htm Extreme Oil http://www.forbes.com/forbes/2001/0528/186.html Security Is Spelled KGB http://www.zdnet.com/zdnn/stories/news/0,4586,2763770,00.html?chkpt=zdhpnews =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- GET THE GILDER TECHNOLOGY REPORT Monthly, From the Heart of the Telecosm http://www.gildertech.com ~~~~~~~~~~~~~~~~ GET NEW ECONOMY WATCH Reshaping the Competitive Landscape http://www.neweconomywatch.com ~~~~~~~~~~~~~~~~ GET THE DIGITAL POWER REPORT Electrons Matter http://www.digitalpowerreport.com ~~~~~~~~~~~~~~~~ GET DYNAMIC SILICON Linking the Microcosm and the Telecosm http://www.dynamicsilicon.com ~~~~~~~~~~~~~~~~ GET THE AMERICAN SPECTATOR Online special--50% off cover price! http://www.gilder.com/AmSpecSub.asp =-=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- GILDER CONFERENCE CALENDAR September 12-14, Telecosm V, Squaw Creek Resort, Lake Tahoe CA. The one and only. Produced by Forbes Inc and Gilder Publishing. Details and registration at http://www.forbes.com/conf/telecosm/agenda1.shtml October 22-24, Powercosm 2001, Featuring Peter Huber and Mark Mills, The Fairmont Hotel, San Francisco, CA Digital Power in the Silicon Age. Register now at http://www.gilder.com/powercosm_forms/Conference.asp -=-=-=-=-=-=-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- The Friday Letter is published weekly for subscribers and friends of Gilder Publishing. If someone you know would enjoy it, please feel free to forward a copy. SUBSCRIBE and UNSUBSCRIBE information can be found at the bottom of this email. 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