No doubt, the wireless industry is wringing its hands over concern about a high-tech downturn on Wall Street that’s dragging down values of wireless carriers and manufacturers into unfathomable depths. It’s playing out in bankruptcies, layoffs, delayed IPOs, Wall Street delistings and management shakeups.
As such, the surprise half-percent interest rate cut by the Federal Reserve last Wednesday and hints of further cuts were welcomed by tech-heavy Nasdaq and other stock exchanges that shot up like a rocket on the news.
A sense of hope and optimism seemed to take hold as the peaceful transition of political power from the Clinton administration to President-elect George W. Bush continues. It’s been a while since we’ve heard good news from Wall Street.
Yet it would be a serious mistake for the wireless industry to think happy days are here again and to continue business as usual. The business environment for wireless and other industries in 2001 likely will be anything but stable.
The economic, political and industrial forces at work are as well known as they are unpredictable in their possible manifestations. The health of the economy going forward is particularly important for the wireless industry as executives make big-ticket decisions key to the development of third-generation mobile-phone systems and to compliance with federal mandates, like location-based 911.
Take Bush’s proposed $1.6 trillion, 10-year tax cut plan, for example. Bush, uninhibited about talking up the possibility of a recession, believes a tax cut is needed more than ever as the economy shows signs of slowing. For sure, the economy is not growing at the ridiculous, unsustainable rate of the past few years.
Some Dems, even House minority leader Dick Gephardt (D-Mo.), say a tax cut may be in order. But not on the scale promoted by Bush.
As wireless and Internet technologies converge to produce new, revolutionary products and services in the Digital Age, a great debate is brewing that will shape the direction of the high-tech industry. The incoming Bush administration is pushing for a return of what appears to be supply-side economics.
There also are early indications the Bush administration may be hesitant to embrace economic policies that benefit New Economy firms at the expense of Old Economy sectors, like the struggling steel industry. Bush and close advisers, like Commerce Secretary designate Don Evans, come from oil country. But they’re catching on. Evans last week said he just learned of this important issue, called 3G.
