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July 16, 2008
Pick up today’s paper and you’ll see a stunning contrast between Intel and the broader economy. As economic indicators continue to weaken, Intel has announced record quarterly revenue — providing some welcome news to managed service providers and other IT-centric businesses.
Check out these dramatic quotes about economic conditions vs. Intel’s performance, from USA Today:
USA Today on the economy, July 16, 2008:
“If it wasn’t clear Tuesday [July 15], it is now: This is no ordinary economic crisis, and it won’t be over anytime soon. In fact, problems are multiplying. A year ago, the financial virus seemed confined to subprime mortgages, defaults on loans given to those with less-than-perfect credit. Now, much of the banking system appears rickety, and the U.S. economy has slowed to a crawl. But thanks to robust demand from still-growing countries such as China, the prices of commodities from oil to food have soared — hitting Americans from the gas pump to the grocery checkout.”
USA Today also notes that General Motors has suspended its dividend for the first time since 1922, and the Dow is down 23% since its October 2007 high. In one laughable headline, USA Today says GM is making “Proactive cuts…”
Proactive? Toyota designed hybrid cars several years ago ahead of the current fuel crisis — now that was proactive. GM has been completely reactive. Management was asleep at the wheel, milking profits from big gas-guzzling 4x4s, before GM awoke to the current crisis by eliminating its dividend in a reactive move.
Somewhere in this mess are important lessons for MSPs: Manage your cash wisely in the months ahead. Get lines of credit now — perhaps before you need it — before credit potentially becomes even tighter. As most people zig (example: GM, Ford focusing on big cars and trucks in the 1990s and early 2000s) try to zag (example: Toyota’s early hybrids).
Perhaps that means exploring open source options in the MSP space, or working with vendors outside of your usual comfort zone.
Amid all the negative news, Intel on July 15 released record Q2 financial results. As one financial analyst told USA Today:
“The good number should help bolster confidence that the world is not coming to an end.”
Let’s hope so. The press will spend the weeks ahead writing dramatic headlines about the economy. You can either worry about the doom and gloom, or you can work hard to keep your own financial house in order. Opt for the latter.
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