Post a CommentReady To March On Washington?
By Ed Sperling -- Electronic News, 11/17/2005
SAN JOSE - A top executive at Morgan Stanley last night exhorted an audience of top electronics industry executives to “march on Washington,” because so far nothing else seems to be working.
Delivering the keynote speech before the Semiconductor Industry Association, Byron Wien, senior U.S. investment strategist at the brokerage, said the threats from China and the lack of government responsiveness to the technology industry are putting the industry on the brink of a crisis.
“We’re at the beginning of a very serious challenge,” Wien said. “Unless we take action, we’re in trouble.”
He said the U.S. government needs to provide incentives to the industry, as well as dollars for research and education, because China cannot be counted upon to just continue buying bonds and stocks. He said at some point it will begin buying companies, as well.
Wiens also assailed some of the leadership of technology companies, as well. He said the cash buildup by companies and the reduction of debt shows a lack of understanding about what to do with money and makes many companies ripe for a leveraged buyout. “What this says to me is that companies don’t know what to do with the money.”
He noted that capital expenditures used to account for about 7 percent of sales. That number has dropped to 5 percent, largely because business leaders are afraid that if they invest their market will be eroded by China before they have a chance to recoup their investment.
He also noted that drop in the number of engineering students in general, and those seeking advanced degrees, is a sign that the U.S. needs to get more competitive at the most basic level. “We’re just too soft,” he said. “Science is too damn tough. We’d rather listen to music and become art history majors.”
Wiens added that China will not be a bubble like Japan. The country has not made scurrilous purchases such as buying Rockefeller center. “The smartest people in China go into government,” he said. “I don’t think we can say the same.”
