Nasdaq comes back - MY TWO CENTS’ WORTH by Dickson Co (DFNN.COM)

On Dec. 5, the Nasdaq came back! In its biggest rebound ever, the Nasdaq index was up 10.5% from the day before. Of course, the next two days of trading took it back a few notches because of continuing earnings and revenue concerns for tech companies like Motorola and Intel.

As of Dec. 7, if you had invested $10,000 at the beginning of the year, you were still underwater with a year to date performance of $6,615 or a dip of 34%. Ouch! (Some of my friends have actually lost more than 6 figures in US dollars, can’t tell you their names, their wives would kill them!)

Have the trends reversed completely or has the market bottomed out? I have no idea. I invest on a dollar cost averaging method and I am a long-term player in this industry. (Note: my wife does read my column, you know.) My measurement is on a 5-year horizon. $10,000 invested in the Nasdaq index 5 years ago is now worth $26,130 or an average of about 32%. (Then again, hindsight is 20/20.)

My take on the future is that software and their hardware will continue to have a downward pressure on prices as competition increases, gross margins will drop from 1,000% to maybe only 500% but complemented by a continued increase in users as Small and Medium Scale Enterprises see the value of using computerization as a tool for their business processes. Fundamentally (sorry I don’t do econometric, I do intuitive), this global industry will continue to grow. The Philippines is poised to capture a small portion of that growth. A big portion if ever it gets its act together!

My Two Cents: Look at the fundamentals, there is still so much room to grow. This dip is a window to invest for long-term gains. (Investing in the PSE, of course, may be another matter.)

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I.T. schools

In the last 12 months, there have been at least three big I.T. focused schools that have cropped up. Asia Online partnered with Carnegie Mellon for its academy, Asia Pacific College (SM group) with IBM, and PLDT with NIIT. NIIT is a world-renowned franchise for I.T. technical training from India. These new groups will produce additional supply to the world’s global shortage of I.T. programming talent. The Philippines produces 70,000 I.T. related graduates a year, ranging from the vocational to the college degree computer science graduate, however, with varying levels of quality.

Clearly a backward integration move for most of these groups. I am sure they have created these institutions to augment their own continuing needs for programming talent.

Ed Sayson, Director of Worldwide Talent Acquisition for CommerceOne, was recently in town to scope out the Philippines for sourcing talent as well as placing his talent pool for the local deployment of CommerceOne at BayanTrade. CommerceOne grew from 300 people to 3,700 in one year and is still growing. I am sure he will consider the top graduates from those new groups once they establish themselves as reliable suppliers of good quality, consistent and world-class graduates.

My Two Cents: I.T. schools? Hmmm... Well maybe... HatchAsia? hmmm...

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Transnational Diversified Group

My friend Ramon and I were recently invited by J. Roberto Delgado of the Transnational Diversified Group (TDG), one of our favorite shareholders and director of DFNN, to attend their annual business planning presentation-cum-board meeting. As a fly on the wall (albeit a noisy one) I learned about how optimistic they are about the future of their chosen businesses even if these are based in the Philippines and in Asia.

The TDG board boasts of some of the best business minds in town, namely, Sonny Dominguez (formerly with the Department of Agriculture, now with PASAR and the Davao Marco Polo Hotel), Dr. Bernie Villegas (Dr. Boom himself from the University of Asia & the Pacific), marketing guru Basil Ong, and my seatmate, Dean Sonny Coloma of AIM.

This is an up and coming group (still young at 25 years old compared to other Filipino conglomerates) that has interests in shipping (NYK Line), ship management (Dolship, Crystal Cruises, Disney Cruises), logistics (Emery, Yusen), consumer travel (AMEX Travel and Asiana Airlines) and consumer food (Domino’s Pizza). What was so remarkable to me was the empowerment that the senior leadership was giving its middle managers. It was noteworthy that they were benchmarking themselves against the taipan groups and learning from best practices.

Of course, I was impressed with their vision of I.T. because each and every member-company basically saw I.T as its strategic tool for the coming years. This is a conglomerate that has transited from a family corporation to a dynamic, proactive team of entrepreneurial professional managers with strong, solid leadership embracing I.T. in all its glory and bugs.

My Two Cents: As Dr. Villegas said, "...not only are you (TDG) doing things right, but you are also doing the right things." Watch out for TDG, they are doing both!

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Florida and Roxas Boulevard

It strikes me really funny that two seemingly disparate nations can have a related problem. One has a booming economy and declining unemployment with inflation and its federal deficit in check. The other has a declining economy, booming unemployment and inflating (or was that bouncing) checks to pay for its deficit. America and the Philippines both have crises in leadership.

America is trying to put a new president into power. The Philippines is trying to kick one out! Both have taken their battles to court.

It is very fascinating to watch the contrast in efficiency and skill of attorneys from the US and the Philippines. The Florida trial used laptops and overhead projectors to show their exhibits. I am sure they used their electronic law library for their law research of precedents.

The Florida trial for recounts was over in less than a week because they focused on substance and not on the form. The Impeachment circus along Roxas Boulevard, on the other hand, spent more time talking about translators (Tagalog to English) to the semantics of a ledger versus listahan (list in Tagalog).

Of course, there are similarities, all the lawyers will be highly visible and most will be highly paid, except, of course, for our congressmen/prosecutors/managers who are working overtime for love of country.

My Two Cents: My only request to the key players in this crisis, whatever solution that you decide, please solve it quickly!!

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Dickson Co is CFO (C is for Cheap) of both Dfnn.com and HatchAsia.com. For comments and suggestions, e-mail at [email protected]..