Enough With the Doom and Gloom

The stock market acts like it's the end of the world. But in the real world, plenty of local companies are investing for the future.

Wall Street would have you believe that the future is so grim, companies are refusing to spend their money. Corporations nationwide have something like $2 trillion on their balance sheets.

It's certainly true that many companies have lost confidence in where our economy is going. Companies across the country have laid off hundreds of thousands of employees and are now working the remaining employees so hard, many people are getting burned out. That could be one reason productivity numbers have recently started to fall after rising right through the recession.  Dissatisfaction at the workplace is also rising according to some polls.

It would certainly be nice if more companies would start hiring workers again. Michael Hiltzik, my former colleague at the Los Angeles Times, argues persuasively in a recent column that companies are contributing to the malaise by holding off on hiring workers. More hiring, he points out, would help to fuel demand and stoke the engines of growth.

But it's a gross exageration to suggest companies are somehow frozen in their tracks. The talk of a coming deflation similar to what happened in Japan is absurd. When asset values crashed in Japan in the early 1990s, it took Japanese companies more than a decade to restructure. Many companies never recovered as they stuck to aging product lines and failed to find new sources of revenue.

Japan also faced a rapidly aging population. With almost no new immigration to spur demand, domestic demand was bound to shrink.

By contrast, youngsters continue to flock to Washington state. New companies are popping up every day. Even larger companies are showing great initiative as they search for ways to break the status quo and tap new sources of growth.

Look at Clearwire, which is spending billions of dollars building out a national mobile network that can stand up to the duopoly of AT&T and Verizon. Look at Intermec, which has sharply increased the pace with which it comes out with its mobile devices, helping to spur a new round of productivity at service companies. Look at F5, which now has nearly 2000 employees developing software that improves the basic plumbing of the Internet. Consider Expeditor International, which has opened up dozens of offices in China, and is experiencing a booming business.

Even Microsoft, the company everybody loves to hate, is running on all engines as it looks for new businesses to replace its aging Office and Windows desktop businesses. Many Wall Street pundits say Microsoft should give more money back to its shareholders. True, that might help boost the stock price in the short term. But in terms of the longterm growth of the company, and the health of our region, it's far more important for Microsoft to keep investing the money it takes to develop new growth sectors. And that's just what the company is doing.

Microsoft's billions of dollars of investments in the XBox is finally beginning to pay off in profits and market share. Microsoft's huge investment in the cloud is bound to make it a key player in this fast-growing space. And later this year Microsoft will release its Windows Mobile 7 operating system in a belated effort to counter the iPhone. 

A lot of people have written off Microsoft in the smart phone space. But with its massive installed base of software in enterprises, Microsoft has a good shot at selling devices that are better integrated into corporate IT systems than Apple's iPhone or Google's Android. Indeed, even if mobile devices based on Microsoft software never overtake the iPhone, they have a good shot at  replacing the Blackberry as the favorite for corporate executives. 

Microsoft ceo Steve Ballmer has made plenty of mistakes. But at least he isn't rolling over and playing dead. Instead of simply milking the Office and Windows cash cows and returning the money to investors, he's looking for a way to assure Microsoft remains a force over the long term. No matter what you think of Microsoft, you have to acknowledge that the company's continued healthy is crucial to our region.  

So let's stop worrying about where the stock market is going. As long as local companies are building new products and services designed to tap the growing world economy, our region will continue to be a vibrant place to do business.

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