By Richard A. Glaze

Buggy whips and cell phones for sale

Remember Shirley Temple being loaded into a horse driven buggy and whisked off screaming “grandfather, grandfather”? The buggy lurched forward and carried Shirley to a large house in the city with servants and the virtual horn of plenty.

Now little has been made of the possible source of the wealthy patron. My guess he was a successful buggy whip entrepreneur. Yes, when everybody is driving a buggy, there is a great demand for buggy whips. But as horse drawn buggies were replaced by advanced technology such as automobiles, the buggy whip industry became what many today would call a ‘tech wreak’. But is it really the same. Is the computer and telecommunication industry in danger of being replaced by advance technology or is it the advanced technology itself?

This question is at the heart of some pessimistic arguments about these industries and about the future in technological advances. I did a small survey on the street the other day and I learned that nobody wants to go back to using rotary dialed telephones. Nobody who is using the internet wants slower speeds or wants to stop getting driving directions or using email for business or personal communication. I can guess that nobody in the far reaches of the world who enjoys instant communication through wireless phones or a personal digital assistant (PDA) doesn’t want them any more. As an aside for all you tech-phobics, I remember Marshall Mcluen wrote in the 1960s that the ‘media is the message’. He was right of course. For example, our cars have become our alter egos and we have become one with the television set and no doubt we will mind meld our personalities with our cell phones. But that is a whole different topic.

It is clear that the communications revolution is not over and in fact has just gotten started. What is also painfully clear is that the dot-com mania which pumped billions of dollars into the telecom area caused inventories and businesses to get way out of whack. Companies with ‘no-profit’ business plans were flush with cash and competing with traditional ‘for-profit’ businesses. These companies were buying equipment and components at lighting speed, inflating growth for the solid companies, many of them in the heart of Silicon Valley. As this bubble of capital shrunk, it caused a rapid and deep fall off in revenues and earnings which has led to a surprisingly sharp sell off in the tech stocks.

As businesses recover and this inventory correction and takes its course, many believe that growth rates will be less hyperbolic, steadier and somewhat slower. When the traditional companies are key players you can expect slower more methodic business conditions. For now I would not pack away your cell phone and your PDA along side your buggy whip collection.

Richard A. Glaze is President of Glaze Capital Management, Inc. in Los Altos, an investment advisor to individuals. Glaze is a registered representative with Round Hill Securities, Inc. clearing through Bear Stearns Securities Corp. neither of which are affiliated with Glaze Capital Management, Inc.