Friday, June 13, 2003 8:30 am
On March 18, 2003, as we were on the verge of war and the market mood was dark, I wrote:

“For the immediate term, all attention will be on Iraq and al Qaeda. Don't worry, though - Wall Streeters will gun the markets to show their appreciation of the military campaign, and stock investors will be rewarded for the first time in three years. If the rally is sustained long enough, the bear market will be declared over, consumer and business confidence will improve, IPOs and acquisitions will return, pension funds will return to financial health, venture capital will get out of deadlock, and capital will become much more accessible to businesses large and small.”

Since March 18 the NASDAQ is up 18% and the Dow up 12%. Last week’s Investors Intelligence poll of professional investors found that there are now almost four times as many bulls as bears on Wall Street. On Wednesday, the IPO of the company FormFactor (a manufacturer of semiconductor-testing equipment) was 20 times oversubscribed and ended up fetching a price $1 above the anticipated price range.  Year to date, six of the seven new issues to come to market are now trading above their issue prices.

All of this is quite a change from what we have become used to over the last three years, and is certainly promising.  Wall Street is clearly doing its part in re-attracting investor interest, despite the relative paucity of good news from the economists or from industry.  President Bush and the US Congress have done their part by passing investor-friendly tax cuts and economic fiscal stimulus.  Alan Greenspan has done his part by supplying some of the easiest money ever offered (the 2-year note is now at 1.1%!).

All that is needed now is for industry, especially the those of us in the high tech industry, to come through with the innovative products and services that will satisfy the investor’s expectations for revenue and earnings growth.  Will we?  I hope that your answer is an unhesitating “yes”.   But I would not be surprised if it is "Maybe - but right now my attention is focused on further cost cutting, deleveraging, and restructuring."

It is time for us to shift focus, if the investors recently recruited by Wall Street are not to be disappointed.  They require growth, the kind of growth that comes from new-to-the-world products, services, and markets.  Cost-cutting, deleveraging, and restructuring will not produce the needed results.  If the investors are forced to abandon the market once again in disappointment, they will be very difficult (perhaps impossible) to recruit back a year or so hence.  The industry, the US economy, and the world economy badly needs for us to re-launch the creative vitality that characterized the industry up until 2000.

I realize that some serious obstacles still remain.  None of the structural issues raised in my previous columns have been solved.  There is still far too much capacity to produce cheap communications bandwidth and computing cycles, and far too few compelling new applications that make good use of bandwidth and cycles.  

I have been attempting to do my part by talking to people about some big ideas, change-the-world-ideas, such as my “innovation on demand” idea described here in November and December. Implementation of the “innovation on demand” concept would both help to put the excess computing and communications capacity to very good use and also greatly increase the efficiency whereby scientific breakthroughs are commercialized world-wide.  The good news is that I am starting to get some traction.