MarketVVizard's Market Thoughts

Top 770. Jan 8, 2004 5:11 PM

» pbradford6 - Re: Re: Re: Re: Re: Re: Re: Re: Good Grief Charley Brown!

In response to message posted by Normxxx:

Seems very expensive, risky.

FUND SUMMARY
PIMCO CommodityRealReturn Strategy Fund seeks maximum real return consistent with prudent investment management.Under normal circumstances the fund invests in commodity-linked derivative instruments backed by a portfolio of inflation-indexed securities and other fixed income instruments. The fund may invest up to 10% of assets in high yield securities. The fund may invest up to 20% of assets in securities denominated in foreign currencies.

FUND OPERATIONS

Last Dividend (30-Dec-03): $1.10
Last Cap Gain (10-Dec-03): $0.14
Annual Holdings Turnover 492.0%
Average for Category: 305.18

FEES & EXPENSES

Expense PCRDX Category
Avg
Total Expense Ratio: 1.24% 1.77%
Max 12b1 Fee: 1.00% N/A
Max Front End Sales Load: 0.00% 4.66%
Max Deferred Sales Load: 0.00% 2.88%
3 Yr Expense Projection*: $N/A $773
5 Yr Expense Projection*: $N/A $1,201
10 Yr Expense Projection*: $N/A $2,314
Shareholder Services Fee: 0.58

* Per $10,000 invested

FUND OVERVIEW

Category: Specialty-Natural Res
Fund Family: PIMCO Funds
Net Assets: 117.61M
Year-to-Date Return: 20.55%
Yield: 5.96
Morningstar Rating: N/A
Fund Inception Date: 29-Nov-02

-- posted by pbradford6

Top 771. Jan 8, 2004 5:37 PM

» Normxxx - Re: Re: Re: Re: Re: Re: Re: Re: Re: Good Grief Charley Brown!

In response to message posted by pbradford6:

Yes. It's not cheap and it's not for the faint of heart. It invests in commodities futures (on margin) and uses the margin money to invest in Treasury bonds and TIPs. On the other hand, it went up 30% last year-- just about the amount of the dollar drop against the Euro.

-- posted by Normxxx

Top 772. Jan 8, 2004 7:15 PM

» Normxxx - Re: Good Grief Charley Brown!

In response to message posted by azxcvbnm:

The Daily Reckoning,
Bill Bonner,
London, England, Monday, 5 January 2004

The big financial story of '03 was the drop in the dollar -- which dwarfed all other trends put together. All U.S. assets are priced in dollars. If, all together, they are worth about $50 trillion -- Warren Buffett's estimate -- last year, Americans lost $10 trillion (measured in gold or euros). This followed a similar loss the year before. But neither Greenspan nor Bernanke bothered to notice... or stooped to wonder what it might mean.

"There appears to be enough evidence, at least tentatively, to conclude that our strategy of addressing the bubble's consequences rather than the bubble itself has been successful," said Greenspan to the annual meeting of the American Economic Association. Success, in the Fed Chairman's view, is demonstrated by the "exceptionally" mild correction following the most extravagant bubble the world has ever seen.

Despite terrorist attacks, stock market scandals and war, consumers just keep trucking their way to the poorhouse. Mr. Greenspan did not mention it, but since he has been head of the Fed the average American has spent a higher percentage of income -- from 75% to about 85% -- trying to keep up appearances while not falling behind in his debt service payments.

Greenspan acknowledged that he might have raised rates to prick the bubble. But that would have meant a real correction rather than a phony one. A falling stock market would "bring the whole economy down with it," warned Greenspan. The Fed chief declined to explain why avoiding a correction by increasing consumer debt was a good thing... nor did he explain how debt might someday be eased without a correction... or what would happen when his debt bubble, now at higher altitudes, eventually blew up. Nor did he bother to reflect on what would happen when foreigners lose confidence in the debt-puffed dollar.

But leave it to Ben Bernanke to rush in where even Greenspan feared to tread. The newest Fed governor said he saw "little risk" of a dollar crisis. Instead, the risk Bernanke sees is the menace of not enough inflation. Inflation is "at the bottom of the acceptable range," he said, and explained that the Fed would make sure it moved higher, not lower.

These remarks seemed to push the world's lenders closer towards the risk Bernanke couldn't see. "Dollar drops to record low against euro after Bernanke's comments," Bloomberg reported. An American who earned $20 per hour in 2001... earned the equivalent of only $12 last year.

In terms of real money, Americans are losing income faster than at any time since the Great Depression. Pity no one mentions it.

-- posted by Normxxx

Top 773. Jan 8, 2004 7:28 PM

» Normxxx - You Grow Weak, Father Dollar, The Trader Said

Father Dollar

"You grow weak, Father Dollar," the trader said,
"And now sag against euro and yen;
Perhaps I'll seek elsewhere for safety instead,
Then come back, though there's no telling when."
"What's all this," Father Dollar cried out in deep shock?
"How you loved me in recent times past;
You'd buy all of my bonds and collect all of my stock,
I felt sure it was destined to last."
"That was then," laughed the trader, "we live for today,
And your current account is a mess;
Your people will not their consumption delay,
Should we pay 'though they will not spend less?"
"Don't be cruel," pled the Dollar, "why can't you be nice?
You know in my day I was kind.
I bought with a smile, and gave free advice,
Be a sport, help me ride out this bind."

-- posted by Normxxx

Top 774. Jan 10, 2004 7:24 PM

» Normxxx - The Illusion of Prosperity

The Illusion of Prosperity

by Barclay T. Leib | January 7, 2004

There was a short book written in the late 1980's entitled The Illusion of Prosperity. Within it, the author outlines all the various political machinations that were involved in the original 1985 Plaza Accord to drive the dollar lower, and how a declining dollar created a boom in U.S. equities -- at least until the 1987 market Crash.

Late 2003 and early 2004 are indeed reminding us a great deal of 1987. In 1987, come early spring, first gold and silver took off; then a few weeks later, bonds started to drop; and eventually the dollar went into a free fall. All of this basically started in March 1987 and took until October 1987 to to come to a head. This is when James Baker blithely pronounced on the weekend of October 18, 1987 something to the effect of: "Tant pis for the Germans if they don't like the U.S. dollar decline." In our opinion, Baker basically served up the coup de grace in that statement to an already very shaky financial system. Today of course we have Fed Governor Bernanke saying similar stuff -- once again playing with fire.

And while the popular press heralds the return to a new equity bull market, take one look at the chart below of the S&P denominated in European euros, and you will gain a better sense of the truly illusory world within which we currently live. The entire March 2003-Jan 2004 U.S. equity rally, adjusted for the dollar's decline over the same period, looks pretty pathetic.

We will be watching this S&P in euro chart very carefully in the coming weeks. To our eye, it may not be quite ready to turn back down quite yet. Instead, it may have one final thrust left in it to the upside -- just to hook a few more suckers.

In 1987, it was of course the bond market that eventually revolted to the weak dollar/strong equity/perky commodity "threesome." The active nearby bond futures contract specifically fell from above 100 in April '87 to touch 76 in Oct '87, before moving 5 limit moves higher to 88 the day after the equity Crash. If any such fixed income path were to ever transpire in 2004, I wish Fannie Mae the best of luck in hedging their mortgage portfolio's negative convexity.

We are sorry to have been so quiet of late, but we are still quite honestly stepping our way through exactly how and when this current "happy" and illusory mess will come undone. But with time, it must.

-- posted by Normxxx

Tom Hanks - Portfolio Manager

Top 775. Jan 11, 2004 1:53 PM

» MarketVVizard - Latest From Bill Gross

I think I've said in the past that I didn't have a whole lot of conviction either way when it came to interest rates, nor do I trade interest rate derivatives. I always take seriously the comments from proven successful experts in any field. I have a lot of respect for Bill Gross, and I think his latest article is worth reading.
__________________________________________

There are a number of ways to skin a cat or analyze the fortunes of the bond market. Fed watching, economy and inflation forecasting, supply and demand analyzing - take your pick, mix and match ’em, above all be prepared to be humbled. If it were easy, I might not be writing Investment Outlooks for a living. (Surely a joke.) The older I get however, the more dependent I become on history. "Older, but wiser" goes the conciliatory saying with its presumption that age can lead to an understanding of sorts unavailable to the more youthful and less experienced. Those of us pressing 60 and beyond certainly hope so - it’s one of the few pegs we have left to hang our hats on. "I was here first" doesn’t cut it when you’re trying to outperform the bond market with a $350 billion portfolio. Perhaps age with its inherent appreciation for history does, however. If you can’t out analyze ’em or out Fed watch ’em then throw the history book at ‘em. Hopefully, as Mark Twain suggested, there will be a rhyme or two that leads to something that the rest of the pack has failed to pick up on.

This nouveau fascination with history actually began way back in my youth. Thomas Bailey’s The American Pageant was sort of my high school Bible - it still sits prominently on my library bookshelf. Later, Paul Johnson’s Modern Times and A History of the American People consumed hours and hours of personal reading and reflection. "They were us - we are them…we leave almost identical footprints in the sand," was the rhyme I heard more than anything else when reading them. And so it was only natural, I suppose, with such a heritage and completing my sixth decade and all, that I should turn to financial history in an attempt to outskin my feline bond market competitors. Now, there are two coffee-table sized books that sit prominently on the right side of my library desk - Triumph of the Optimists and the 2003 Yearbook of Ibbotson Associates’ Stocks, Bonds, Bills, and Inflation - where before there were none. Now, I turn to their historical statistics for bond market wisdom where before I would consume a myriad of Wall Street talking pieces. I’m placing more of my bets these days on the rhyme instead of the cacophonic noise. Let’s hope it works.

These two books are voluminous. I tell clients that one could be stranded on a desert island like Tom Hanks in "Castaway" and never finish appreciating all the information that lies inside. You want to know the long-term winner of the growth stock versus value horse race? Page 157 of the Ibbotson Yearbook will tell you. Do you want to know returns on South African bonds for the 20th century, decade by decade? Turn to page 281 of Triumph of the Optimists. Still, most of you wouldn’t go that far, even if you were stranded on a desert island. You’d start up a conversation with a volleyball named Wilson instead. So let me summarize a few of the highlights, a selective history of bonds that might make the most difference as we wind our way through the next 12 months or even the next 12 years.

First of all, as readers of my Outlooks discussing TIPS and real interest rates will remember, I find it fascinating that investors and economists believe that the real interest rate experience of the last two decades of the 20th century should be the norm for the first twenty years of the 21st. The "Outlook 2004" edition of the highly respected Bank Credit Analyst, for instance, states that the "equilibrium level for the fed funds rate is between 4 and 5%, so there is a long way to go before policy becomes restrictive." Not so, I would claim, especially given the history of real rates from Triumph of the Optimists shown on the following page.

The fact is that 4-5% equilibrium short rates which in today’s inflationary environment equate to 2-3% real rates shown in the chart, were a product of disinflationary policies begun in 1979 and were meant by and large to be restrictive, to bring inflation down presumably at the expense of growth. But the first 80 years of the century experienced average real short rates of .4% in the U.S., .1% in the U.K., and negative in many Euroland countries. This history tells me to expect a long stretch of close to 0% real interest rates in the U.S. and most G-10 countries, especially since reflation is now the stated goal of two of three of the world’s most important central banks - the U.S. and Japan. One of the most important conclusions to be drawn from this history lesson, as outlined in last month’s Outlook, is that bonds (and stocks too) will be low return asset classes for the foreseeable future. That is so because the market’s interest rate North Star, the short-term yield which guides and steers buyers and sellers through carry and arbitrage activities, will be close to 0% real - if history rhymes.

Investors desiring something more than 0% after inflation from their bond investments will be comforted by what Ibbotson labels the "horizon premium" and what others might call the "yield curve risk premium." The chart on the following page displays a 77-year history of the annual returns of long-term Treasury bonds versus 30-day Treasury Bills.

Although the yearly numbers are obviously volatile due to the direction and price change of the long bond, the historical annual outperformance of 1.6% for the long bond has to be instructive. First of all it alerts a bond investor to the risks and rewards of "horizon" or maturity extension. It says in any given year you should expect 1.6% more from owning 30-year bonds than 30-day bills, but to expect a Wild Toad’s ride for the advantage. Secondly, it almost screams that today’s 30-year TIPS, which provides a real yield of 2.4%, is still a bargain by historical standards. Since 30-day bills have averaged approximately .5% real and long Treasuries carry a premium of 1.6% to that, then a long maturity TIPS should yield 2.1%, all else equal. Since it still yields more, and because today’s reflationary environment should afford an insurance yield discount to the TIPS as opposed to the nominal 30-year bond, history says tilt your Treasury duration in the direction of inflation protected securities. We have been.

Financial history’s next lesson concerns corporate bonds and the risk versus return of owning them over time. Triumph of the Optimists offers a chart displayed above that details the "default premium" and the cumulative total return of U.S. Aaa/Aa corporate versus Treasury bonds. The annual default premium includes not only losses from defaults, downgrades, and early calls, but spread widening and spread narrowing.

This is history’s total package of risk versus reward when it comes to corporate bonds, with a standard deviation by the way of 3.0% over the past 100 years. The message it sends is that yes, Aaa/Aa corporates do outperform Treasuries over time - by an average of 53 basis points a year. Since the annual default premium is 48 basis a year however, it says that in order to get that 53 you need to start off with a spread of (53+48) or 101 basis points. Today’s spreads of 30-35 are far shy of that and indicate that the odds of successfully outperforming Treasuries are substantially reduced. Holders of lower investment grade and junk bonds should heed this warning light as well.

Finally, if only to keep this Outlook reasonably brief, let me acquaint you with two charts from Ibbotson that absolutely fascinate me - and hopefully will do the same for you. The first is a table of long-term versus intermediate-term U.S. government bond returns over the past 75 years. Based on the horizon premium example mentioned on previous pages, an investor might reasonably expect to earn a total return advantage from long bonds, especially during a 75-year environment which offered a mild bull market as the table below indicates via the "capital appreciation" row. The returns however are almost identical (a 100-year "Optimists" study of the U.K. shows 5-year intermediate Gilts outperforming long Gilts by .2% annually). The secret to this conundrum comes from the simplistic phenomena of yield curve roll down, which allows for a 5-year Treasury to morph into a 4-year Treasury at a lower yield and a higher price over a 12-month period of time.

The 5-year Treasury’s nearly identical performance, however, comes with the benefit of sharply reduced volatility as seen in the chart on the next page.

Such combinations are a bond investor’s dream. Identical returns - half the volatility. This history leads to a myriad of possible portfolio structures, all emphasizing the short to intermediate portion of the curve. Last month’s Outlook detailed some of them. For those investors who value higher returns as opposed to volatility but want to match liability durations of 10+ years, a double or triple barreled portfolio of intermediate bonds should be a viable solution. For those investors who treasure a stable net asset value and a good night’s sleep, yet want returns close to the yields offered by long-term bonds, a simple intermediate-term portfolio might be the answer. Long bonds are the loser in this historical and presumed future bond market environment.

And for those of you already conversing with Wilson the volleyball, I offer my humble apologies. Desert islands inhabited au solitaire can lead to strange behavior from even seemingly normal types. What I experienced on my "island" was a lesson in financial history that could pay huge "dividends" in future years. That history points towards an environment of lower than expected real rates of interest, low total returns for bonds (a 4% total return future world), an apparently overvalued corporate sector, and intermediate maturity bonds that should perform equally with long bonds at half the volatility. The one bond investment that fits into each of these boxes? Intermediate maturity TIPS. You’ll likely only earn 2-3% annually after adjusting for inflation, but hey - 25 years on that island, you get rescued, come back, cash in that 401k and you’ve got twice as much as you had before in inflation-adjusted terms. For those of you who prefer to avoid islands altogether while managing a bond portfolio of countless millions or billions of dollars, I suggest you bone up on your financial history anyway. It may not repeat, but it surely rhymes and what a sweet sound that outperformance can make. Mark Twain, Wilson - and Tom Hanks - would be envious.

William H. Gross

Managing Director

-- posted by MarketVVizard

Top 776. Jan 11, 2004 2:57 PM

» MarketVVizard - The "new" China

The skeptic in me really comes out when I see every schmoe jumping on a bandwagon. That has certainly been the case with anything "China" over the last 12 months. Just bring up a chart of any stock with "china" in its name and you will see what I mean. IPOs with a China link have been oversubscribed by several hundred percent. Its been a speculative frenzy. There is no doubt that there has been tremendous growth, and tremendous money pouring into China, but there is also a lot of smoke and mirrors. Their banking system is in shambles and corruption is rampant. As far as freedom, human rights, and democracy go, China is still a joke.
_______________________________________________
Police raid paper that broke SARS story
Reuters
January 9, 2004

Police stormed the offices of one of China's feistiest newspapers and detained the editor in chief and six executives in what many journalists regard as retribution for aggressive reporting on a recent SARS case.

Employees said on Wednesday that the crackdown on the Southern Metropolis Daily came soon after it became the first news organisation to report on the fresh outbreak of severe acute respiratory syndrome in Guangzhou, where the newspaper is based.

The paper's investigation late last month prompted authorities to confirm that China had its first suspected case of SARS since the epidemic ebbed last summer.

Southern Metropolis Daily also came under heavy political pressure last spring when it exposed the beating to death of a migrant worker in police custody, a case that eventually prompted the Government to abolish longstanding rules that allowed the police to detain migrants at will.

Employees said they were told that the chief editor, Cheng Yizhong, and six other executives of the newspaper's business department were detained on Tuesday and held for questioning on suspicion of financial crimes. Mr Cheng was released on Wednesday but there was no immediate word on the status of the others who were held. The police declined to comment.

Employees said they interpreted Mr Cheng's detention as a clear signal the newspaper had exceeded the tight boundaries of press freedom and offended provincial officials.

A waitress in the country's south was declared a suspected SARS case yesterday, and in Hong Kong three members of a television crew were being tested for the virus, health officials confirmed. ____________________________________________

In other news... China on inflation:
____________________________________________
Country puts lid on cost of basic utilities
CD
01/08/2004

BEIJING - Price hikes of farm produce leads to biggest CPI increase in 6 years. Hoping to prevent massive price hikes nationwide, the central government will curb the rising cost of basic utilities.

The freeze means residents will not see any immediate hikes in the cost of water and electricity.

An official from the National Development and Reform Commission, who wanted to be known only by his surname Zhang, told China Daily that the no-hike policy will be effective for at least the first quarter of 2004.

What happens after that is still up in the air.

Whether we increase the prices of daily necessities or not will depend on China's whole economic situation, he said.

In November 2003, the consumer price index (CPI), a widely used economic indicator, saw its sharpest hike in more than six years.

As the nation's economy opens up, costs for more goods and services become more dependent on market forces. Only essential necessities, such as gas and crude oil, are still priced and supervised by the government.

By the end of last year many expected the government to increase the prices of water, gas and electricity to reduce waste and curb growing shortages.

Although it did not go through with planned price hikes, in late December, the commission had announced a jump in the cost of coal- produced electricity. As of January 1, prices would jump by 0.7 fen (0.08 US cents) per kilowatt hour. The government had earlier suggested a price hike of up to 12 yuan (US$1.44) per ton for coal used for power generation.

At the same time, some local governments have been considering boosting water prices.

But Zhang said all the price hikes will be banned and the commission's focus will be centered on keeping them stable.

Experts believe the new policy is aimed at preventing nationwide inflation.

China's consumer prices were 3 per cent higher in November 2003 than a year earlier.

The hike was driven by surging food prices, the National Bureau of Statistics said.

November's jump in the CPI was the highest monthly hike since April 1997, when CPI rose 3.2 per cent year-on-year.

"The trend is continuing. If prices for daily necessities, including water and electricity have been increased, the trend will speed up,'' said Lin Yueqin, researcher with Chinese Academy of Social Sciences. "The consumers' buying enthusiasm will be hampered in the long run.''

Statistics also show that in November, food prices rose a year- on-year 8.1 per cent. Grain prices surged 10.8 per cent last month while fresh vegetable prices jumped 19.4 per cent and edible oil prices soared 27.2 per cent.

At the same time, price hikes have affected rural residents more than people living in cities.

Bai Cheng, a 45-year-old shopkeeper in a mountainous town of Sichuan Province has seen the higher costs hurt his business.

"Many people just look around and ask about prices but don't buy even though the Lunar New Year is drawing near,'' said Bai.

In previous years, the month before the festival is traditionally full of shoppers as migrant workers returned home with money.

That's not the case this year. What's more, Bai fears a hike in the cost of water and electricity would exacerbate the situation.

"If the government raise the prices of water and electricity, which will increase the cost of other commodities in turn, the situation will become even worse,'' said Bai.

The government will not take a laissez-faire attitude toward the trend.

National Development and Reform Commission Vice-Minister Li Shenglin said China has established a nationwide rural price supervision system at the county, township and village levels.

The commission has pledged to keep an eye on prices of products for agricultural use, such as fertilizer, pesticide and diesel oil, as well as prices of services like cattle butchering, to prevent overcharging.

-- posted by MarketVVizard

Top 777. Jan 11, 2004 3:16 PM

» MarketVVizard - Not to mention India

In the past I was also interested in investing in Inda, but India has just as much rampant corruption as China. I think this is ultimately why neither country has made a whole lot of progress in past decades.

I've seen many stories like the following. Another article I read mentioned a medical services company outsourcing to India, and eventually getting blackmailed -- i.e. personal medical records from US citizens essentially held hostage unless more money was paid.

Management by magazine never works.
______________________________________________

Offshore labor drove firm to brink
By Matt Marshall
Mercury News

Go ahead, join the lemmings in the rush to India.

But if you're a Silicon Valley entrepreneur or venture capitalist still considering it, contemplate the over-the-cliff tale of Ishoni Networks.

Last month, the Santa Clara start-up filed for bankruptcy, a victim of moving to India too quickly.

Backed with more than $68 million from venture capitalists from the United States and elsewhere, Ishoni once was branded a rising star. It was developing a cutting-edge chip to allow voice and data services over a single Internet connection -- and was valued as high as $200 million and employed 170 people.

Seeking to cut expenses, Ishoni created a subsidiary in Bangalore, India, and hired software engineers there on the cheap.

Weirdly, though, the subsidiary stopped returning phone calls from Ishoni's Santa Clara-based chief operating officer, Amin Varis, early last year.

Varis made a surprise visit to India in May and learned a big lesson about how much damage 12,000 miles of distance -- even when connected by Internet and phone lines -- can do.

Indian executives, he found, had forced their engineers to join a rival firm, Ample Wave Communications, apparently in a scam to scoop up Ishoni's intellectual assets and then bankrupt it.

Ishoni notified police, and three Ishoni India executives were charged with illegally copying Ishoni's software -- a fiasco first reported in August by online optical networking publication Light Reading and followed by Private Equity Week.

The outcome of that case is not known.

Neither Ishoni nor any of its dozen or so venture investors -- including names like Credit Suisse First Boston, Deutsche Bank, Infinity Capital, Lucent Venture Partners and John Grillos, formerly of MVC Capital, who is the sole VC board member listed for the company -- returned phone calls. However, a spokesman for electronics giant Philips, which owned 51 percent of Ishoni after a $25 million investment in 2002, confirmed Ishoni is being liquidated.

It won't take very long: A blue padlock already hangs on Ishoni's Santa Clara office door. Inside are empty cubicles, deserted desks and disconnected phones.

So, what's the lesson?

The growing hysteria and hand wringing over job loss to India sounds similar to the worries during the rise of the Japanese threat in the 1980s.

But soon after gobbling up U.S. companies and real estate, Japan hit its own internal limitations -- namely bad credit, cronyism and market interventionism. Japan foundered, and has never been considered a danger since.

True, India's vast, cheap labor supply poses a different, more permanent threat. Skilled Indian engineers who speak great English won't be going away anytime soon.

But increasingly, VCs say outsourcing to India has limitations.

Ravi Chiruvolu, a partner at Charter Venture Capital, wrote a column for Venture Capital Journal in March titled: ``Tech Start-ups Should Be Entirely Built in Asia.'' However, Chiruvolu, 35, has since been eating his hat. While he's still keen on doing business with India, the challenges were greater than expected, he says.

Foreign companies are considered easy targets by Indian technocrats and power brokers, he explains. They'll charge for leases and other services up to 10 times the amount they do for local companies. Companies like Intel and i2 took baths on their long-term leases, with i2 paying 100 rupees per square foot for its 10-year lease, compared with the going rate of 10 rupees, says Chiruvolu.

And prices are heading up. Land prices have gone up three-fold over the past few years, Chiruvolu notes. Labor in Bangalore -- India's Silicon Valley -- has even become scarce, and you have to pay the average head-hunter about $500 an employee just to do a search, he says. You pay up front, and sometimes hear nothing back.

Many Indians will forsake start-ups and flee to a brand-name company -- say Intel, Oracle or Sun Microsytems -- the first chance they get.

Even getting the electricity turned on in an office is a chore, Chiruvolu says, estimating that it takes about six months to get an office registered with the government and ready to use -- far more than the eight to 10 weeks promised by the Indian government. Bandwidth can cost more than four times than in the United States, he adds.

Chiruvolu reached a conclusion: Don't go to India for cost reasons alone. ``You should go to India being committed for the longer term, not buckled for a one-year cost reduction.''

Dell and a few other companies have already moved work back from India to the United States.

Dick Kramlich, a partner at Menlo Park's New Enterprise Associates, and one of the valley's most experienced venture capitalists, has a few start-ups with business in India, but he says: ``If you're doing it for labor arbitrage, you're making a mistake, because it's only a short-term gain. You'd better do it for quality.''
___________________________________________
BSEB whistleblower seeks protection TNN 01/09/2004

India: Close on the heels of the murder of whistleblower Satyendra Kumar Dubey, who had tried to expose rampant corruption in the construction of the PM's Golden Quadrilateral highway project, Bihar State Electricity Board (BSEB) director Thakur Ravindra Kumar, who had also tried to point out acts of omission and commission in the board in the recent months, has received anonymous telephone calls threatening him of dire consequences.

Kumar on Wednesday wrote to the director general of police (DGP) seeking police protection in view of the recent series of calls. In a four-page letter to the DGP, Kumar said that he did not rule out the possibility of involvement of some officials of the board in the matter. "I am under severe mental pressure in view of the frequent calls," he said in the letter.

The letter also mentions the names of three senior officials of the board. Kumar has urged the DGP to take appropriate action against them.

The letter said that following the intervention of the governor, the chief secretary has already ordered an inquiry into the various acts of omission and commission in the board.

Thakur has written another sevenpage letter to chief secretary K A H Subramanian for withdrawal of the departmental proceedings against him. He also urged the CS to conduct a probe against some senior board officials who are responsible for rampant corruption.

Kumar in both the letters apprehended that some officials having vested interest could tamper with evidence contained in various important files that pointed to financial irregularities.

Meanwhile, the BSEB is in the process of initiating departmental proceedings against Kumar. Action would be taken against him after the receipt of an inquiry report, said a senior BSEB official.

-- posted by MarketVVizard

Top 778. Jan 11, 2004 3:40 PM

» MarketVVizard - Always interesting to see what the ledgends of IT are up to.

Always interesting to see what the ledgends of IT are up to... if anyone wants my comments on the theological implications of this technology just ask. smile

I won't go there otherwise.
_______________________________________________

Steve Wozniak Works On Tracking System

By DON CLARK Staff Reporter of THE WALL STREET JOURNAL

Steve Wozniak, co-founder of Apple Computer Inc., has lined up Motorola Inc. to help build an unusual wireless network to help people keep track of things.

Mr. Wozniak's closely held company -- dubbed Wheels of Zeus Inc., or WOZ -- is developing a system that uses low-cost radio tags that could be attached to objects, people or animals. By combining satellite location-finding technology with radio base stations, the tags could help consumers or companies protect goods against theft and ensure the safety of children and pets, Mr. Wozniak said.

Motorola's broadband-communications unit, which makes products such as modems and television set-top boxes, will be a "prime partner," Mr. Wozniak said, licensing WOZ's technology and developing components of the system. He said he expects the collaboration to bring initial products to market this year.

Officials at Motorola, of Schaumburg, Ill., said it is too early to tell whether that schedule can be kept, but expressed enthusiasm for the effort as part of the company's "connected home" strategy. "It's an innovative design," said Vince Izzo, a director of business development in the Motorola unit. "People have things they care about, both people and businesses."

WOZ, an acronym that is a play on Mr. Wozniak's nickname, has been vague about aspects of its technology and business strategy. But the Los Gatos, Calif., company plans to license elements of its technology to other partners, and operate other parts as a service, he said.

It is clearly Mr. Wozniak's most ambitious entrepreneurial effort since he and Steve Jobs started Apple in 1976. The new venture, founded in 2001, was partly inspired by Mr. Wozniak's difficulty in locating his dogs after they got past an electronic pet fence. He also was interested in ways to combine the global positioning system, the network of location-finding technology known as GPS, and aspects of other wireless communications networks.

Many other companies plan to deploy another kind of electronic tagging system known as radio-frequency identification, or RFID, for uses such as tracking goods in warehouses and stores. But those tags have an estimated range of only about 30 feet, Mr. Wozniak said, and in practice have much shorter range.

By contrast, Mr. Wozniak said WOZ's base stations will have coverage zones as large as 10 square miles. The company's technology is designed to send data at relatively slow rates, which helps to conserve battery life.

If the tags are inexpensive enough, Mr. Wozniak said, companies could attach them to all kinds of assets, such as vehicles or computers. So could consumers, and parents who want to track their children's whereabouts.

Each tag receives GPS signals to help track its location, Mr. Izzo said, and also sends signals to the base station. A consumer might buy a tag and a portable base-station device, with a display, that would alert them if a pet or child exceeded a designated area, he said.

WOZ has discussed with groups of parents or homeowners setting up networks of base stations on a voluntary, collaborative basis, to extend their coverage area. But Mr. Wozniak said he now also expects partner companies will help set up such devices, similar to the way wireless "hot spots" have sprung up in many businesses using a technology called Wi-Fi.

-- posted by MarketVVizard