from the editor

Things are looking up.

I am feeling good, and it's about time we all did. We've certainly endured a long streak of bad news, bad executives, bad earnings results, and bad weather.

What I want to discuss are indications that global markets are finally turning around. Here is some evidence. The Institute for Supply Management (ISM) survey is filled out by approximately 465 purchasing and supply managers across the US every month. They post information related to production, new orders, employment, and inventory, which reflects the breadth of movement of manufacturing activity from month to month. Economists and politicians check the survey data for signs that the factory side of the economy is improving after a three-year slump. The ISM managers' inputs are figured into a single index called PMI based on new orders, production, employment, supplier deliveries, and inventories. A point value of 50 or greater indicates the manufacturing economy is expanding. June 2003's PMI was 49.8 percent — up from 49.4 percent in May 2003. In addition, the new order index has been above 50 percent for several months (52.2 percent in June 2003 and 51.9 percent in May 2003). These national indicators show that there is improvement ahead for US manufacturers.

Meanwhile, high-tech Silicon Valley is showing signs of renewed life. Stocks of eBay, Cisco Systems, and Yahoo, for instance, that have suffered greatly, are regaining growth and stockholder confidence. According to USA Today, Intel recently posted an eight percent year over year increase in revenue, "its biggest in three years." In addition, Oracle is up 11.9 percent, Hewlett-Packard is up 25.6 percent, NASDAQ is up 27.1 percent, Cisco is up 35.8 percent, Intel is up 60.1 percent, eBay is up 62.5 percent, and Yahoo is up 87.2 percent. This is encouraging news indeed.

Silicon Valley, home to the biggest concentration of venture capitalists and high-tech start-ups, staged the dot-com surge and subsequent nosedive in the late 1990s. Its resurgence can have significant implications for the nation's economy.

While no one expects the same high-tech boom of the 1990s, analysts expect that the US is returning to a normal environment that is nowhere as dismal as in the past few years or as out of control as in the Internet bubble.

For one, there are improved business conditions. Business spending is rising. The Commerce Department reports that high-tech sales — hardware, software, and services — are improving. Companies are reducing costs through smarter investments and improved sales. This is truly a win-win situation for software providers and their customers.

Second, NASDAQ high-tech stocks are up 27 percent this year. Thirdly, there is a resurgence of research and development. Companies are again investing in new technology and new products. The reality is that there is renewed enthusiasm and reason to celebrate market growth. And, those elements can only point toward positive growth.

In addition, there are other areas that are experiencing gains. For instance, the worldwide market for handsets took off in the second quarter of 2003, reflecting a continued consumer demand for mobile telephony. According to information from IDC, worldwide handset shipments grew by nearly 20 percent in 2003 so far. Nokia maintained its top position in the market with Ericsson regaining marketshare from LC Electronics. Nokia is strengthening its presence in the US and the world. Nearly one third of all Nokia phones shipped this quarter had color screens, as well as multimedia and digital input capabilities. Germany's Chancellor Gerhard Schroeder says the country's economy has passed through its low point and is on the way to recovery. In August 2003, he said, "More and more economic indicators and forecasts from national and international institutions are pointing to a revival in the economy." He added that sentiment in the economy was improving and consumer confidence was significantly better.

While the new direction will take time to take hold across the US, Europe, and Asia, I am confident there will be resurgence in growth and prosperity. What are your thoughts? I am interested in learning how your organization is faring. Do you see a change in the business atmosphere? Send e-mail to flowfront@moldflow.com. I'll include your comments in the next edition of Flowfront.

Laura Carrabine
Editor