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Show he Salt Lake Tribune BUSINE S S 5 E SUNDAY MYOUR FUNDS, E-3 BISMALLBUSINESS, E-6 SAVINGS GAME, E-7 OCTOBER31, 1999 Brokerage Buster or Humbug? Y2K systems crash Compiled by Lisa Carricaburu : : What We Have §. Here Is a Failure ma . To Communicate a. ts he % y i In manycorporate mergers, a fail- ure in communications between Computers are tightly how te will behave atter Just how susceptible is Wall Street to the Y2K bug's bite? The answer depends on where you i agersoften donot seek out feedback from employees, so they do not know that their way of communicatingis hurting rather than helping a company’s performance. — The Associated Press 3 Fewer Workers Do More The companyhasslashedits pay- roll but not the workload, and the bosshasneither bought new equip- ment nor called in extra help to take up theslack, Those who survive the cutbacks, therefore, are left handling their own workandthatof former colleagues. Sound familiar?It should, because that's becomethe typical corporate scenario, according to a new surveyby the American Management Association. About 80 percent of the firms thatlaid off workersbetween 1995 and 1999 — but which did noteliminate the work those employees had done simply assigned the tasks to others, according to the organization's annualjobs survey. — The Chicago Tribune 3 Five U.S. cities have reached 50 percent Internet penetration, accord. ing to Scarborough Research. Washington, D.C., leads the most-wired pack with nearly 60 percent of the adult population online. It's followed by San Francisco; Austin, Texas; Seattle and Salt LakeCi Saint PaulPioneer Press 4 Good Boss, Bad Boss Whenit comesto rankingthe boss, Americanssayit’s all in the attitude. A national survey of1,000 peo- ple chosenat random by Personnel Decisions International found37 percent of people surveyed identified | 1 { =e if} BY GUY BOULTON THE ALT LAKE erences to the term are becoming common. It appears in headlines.It’s the subject of studies. Even the Doonesbury cartoonhasreferredtoit. But just what is the New Economy? Andwhatis new aboutit? “wag aA| | to extremes. Onthefringes are those whoadvise investors to sell everything, buy gold, pack up the children and head for the 3 hills. fi 8 A surprising number of economists contendthe economyis in the midst of a historical shift, one that could lead to Conventional wisdom indicates the millennium bugat worst will be a passing and minor inconvenience, barely registering a blip on the trading screens of the nation’s largest brokeragehouses. “We have beengetting lotofcalls from our clients and they areall asking whether they should be concerned,”said Sterling Jenson,presidentof First Security Investment Management in Salt Lake City. “We have been telling them not to worry.” Concerns about the Y2K problem which may prevent some computer systems and programsfrom recognizing the year 2000 unless they are fixed has raised all kinds offears. While no one knowsexactly whatwill happen after Jan. 1, some have electricalutilities, railroads and manufacturing plants will shut down as a bi- nary blowout cascades throughout the economy. Among some investors, perceived terrors include the possibility of panic selling leading to a completecollapse in stock prices because computer networks no longer will be able to correctly process data. Such fears are unfounded, according to Kerrie Idiart, spokeswoman for the Securities Industry Association, which represents the nation’s stock brokerages. higher productivity, and therefore BiHeating and cooling: on weekends “They are realizing if they are in it [the market] for the long term then they can manage through any short-term fluc- industryappearsto be the most prepared to weather any tempest caused by the computerdateglitch. In talking with investors, Bunkersaid those with long-term investni-t strategies seem to be theleast prone to worry about any market fluctuations that might resuit from Y2K. fffTeller machines (ATMs): Will not work if bank accounting systems cannot determine the correct date tems: Possible maftunetions it orion Geftilators,alysis equipment and Giagnostic systems {B Utilities: Extremeproblems could shut downpower grids, tratfic signals, oil or natural gas pipelines iE Rallroads: Switching systems could fail, disruptingtravel and shipping ‘Less Concem About Y2K BBug ug Of investors who say they have savingsorinvestments other than a savings accountata bank,percentthat are concemed about Y2K problemsaffecting the safety and performanceof their investments: tuations,” Bunker said nd it makes sense when you consider that someof the older investors lived tions are supported Still, Bunker said ofall the industries she has examined,thefinancial services controler 1 Bank vaults: Time locks may notfeaon Jan. 1, 2000 Computer networks: Databases and scheduling cameras:Programmed software may behaveerratically, ioncen ferently on weekends, losing or garbling data jeekdays and holidays il/Water and sewer: Automated iSecurity systems: May deny ‘pumpingstations andvalves could entry of unlock ail doors function SOURCES. CST 2000, inl PC Week. ¥2K Journal test of its systems at 400 of the country’s brokerage houses. “Everything went no proble: said Bunker, a former systems analyst at Weber State University. “No one can say for sure there will be no problems.” 1Computerized manufacturing: Delaysat smali parts makers could siall assembly factories they supply 8 Office telephone systems: An invalid date might shut down central BElevators: Some change their time cycles according to thedate and time of day Voice mail systems: May delete messages at the wrong time if they lose track of fate In April, the securities industry ran a else, asked Jennifer Bunker, a member of the Utah Governor's Coalition for Y2K Preparedness. “You cannot call a brokerage house and have them guarantee there will be +: Some systems maintain ditterent temperatures on weekdays and through the Great Depression and have that perspective to draw upon.” pecting anyproblem: he said. And why would they say anything TRIBUNE, It’s called the New Economy and ref- the nation’s securities markets can run smoothly. We have tested, checked and rechecked the system. Weare not ex- Plugged In everydaylite related problems associated with the A more mainstream approach, however, suggests investors should just sit tight. information or long gaps between communications, andby the fact that managementoften has a cheerleading attitude that employeesfind phony. Another problem is that top man- Some may places iTe impact may look and whoyou ask. Opinions on whether computer- managed communications process before the deal was cut. The problem can be exacerbatedby inconsistent | fail; Ta will not. Some: Economy? Better productivity, standard ofliving among benefits of modern age,experts say } orn eto our dallyy ‘te. ‘and no one knowsexactly turn of the century will adversely affect 1 | investment houses managers and their employees hurts a company’s performance,finds the managementconsulting firm Towers Perrin. But TowersPerrin says the problem doesnot begin with the mergerannouncement.Often the company did not have a well- Millennium Bug’s impactOn Daily Life | by a Yankelovich ties Industry Associ- what is new about the New Economy. Randolph Court, technology policy analyst for the Progressive Policy Institute, a think tank in Wes nEon, DC. lists four defining characteris W@ The so-called knowledge economy, which places a premium on education, has supplanted an industrial economy based on mass production. In other words, the office has become more important than the factoryfloor, the cubicle hasreplaced the assembly line. probably gets raw materials or parts from factories in other countries. lot oncemed Partners survey con- An exactdefinition hasyet to emerge. But a consensus moreor less exists on Andthatfactory, no matter where it is, 38% 26% Those observa- ducted for the Securi- higher standardsof living, in the coming decades. a new economy,”says Louis an economic historianat Johns Hopkins Universit, Apparently some economichistorians people who would haveoneofthe better perspectivesonall this believe this NewEconomystuff. @ Globalization has permeatednearly all sectors of the economy. A factoryis as likely to be in Malaysia or Mexicoas in the building behindthe corporate office. 7199 1/99 concemed with Y2K ‘Source: Market Facts for U'S. Bancorp Piper ation in June. The survey found that 88 percent of investors say they are not concerned about brokeragefirms’abilities to manage Y2K. And fewpeople, only about 6 percent, reported they are “very likely” to take moneyoutof the stock marketbefore the first of the year. Yet even among that small group, 66 percent plan to jump back into the fray during thefirst or second quarters ofnext year. Computertechnician Darren Perkins. ofSalt Lake City, who operates his own Website wherehedi gold andsilver,frequently hearsfrominvestors who question whether they should be liqui. ‘USATODAY offer investors good long-term value, he does not believe investors should put everything they have into the metals in preparation for some Y2K-caused disaster. “I have been telling the friends and family whoask that if they are worried, then maybe they should just consider moving their moneyto little more con servative mutual fund,” he said. Onlyabout 3 percent of those surveyed by Yankelovich Partners said they are planning to buy gold in preparationfor Y2K. Yet evenifthe Securities Industry As- sociation is right that the nation's dating their stock-marketpositions. While Perkinsbelieves goldandsilver See ¥2K BUG,Page E-4 EB Competition is more intense, new products and services are developed faster and new companies are being started at a pacerarely seen in this century. The word “entrepreneurship” has become astiresome asit is awkward. But the economy has seen a burst of innovation driven by companies thatdidn't ex- ist 20 or even 10 yearsago. The so-called information revolution is transforming the way companies do business and the way people work. Further, companies gradually are begin ningto figureout howtouse information technologyto lower costs, particularlyin theall-important servicessector. The changes can be seen throughout the Utah economy. They haveeven re- madethestate’s economy. Fifteen years ago, Utah washeavily dependentonnat ural resources and military spending. Now mostofthestate'sfastest growing and someof its largest employers are See NEW ECONOMY. Page D-8 “communication skills or interper- sonal skills” as the most important quality in a good boss. Ability to un- derstand employees’ needs and help in developing skills came in second, with 19 percent. And 18 percent said good day-to-daydecisions mattered most. TheAssociated Press Complex Currency Schemes Enmesh U.S. Companies A BY MARCY GORDON THE ASSOCIATED PRESS Happy Halloween! Have youfinished your Christmas shopping yet? Someretailersare pro: moting early buying and adding moreelectronic-shopping options. Gap Inc.'s Old Navychain encour: ages holiday shoppers by offering refunds until Jan. 31, 2000, on merchan: dise bought after Oct, 1, Normally, Old Navylimits full refunds to 30 days after purchase. TheWall Street Journal 4 Intelligent Interaction Emotional intelligence, sometimes * abbreviatedto El or EQ,ina takeoff on1Q, has becomea hot human: resource consulting area in the tast Elis rootedin thebelief onlypartly depends on + one’s intellect, More importantis » how onebehavesand interacts with others over time, In thepast decade, +) + studies of successful people repeat edly showed researchersthat quali _ ties such as empathy, self-control and » mood management werebetter indi } cators of business success than were Se or mastery of technical » Skills, Knight Ridder Newspapers WASHINGTON Big U.S. corpora: tions are getting entangled in complex schemes in which Colombian drug car: Law enforcement authorities are warning company officials to watch for signs they maybe receiving drug money export. And Custom Service employees are training companiesin howto detect andavoid the schemes, In September, Customs Commissioner Raymond Kelly signed an informationsharing agreement with his Colombian controls in the United States. Once the exchange occurs, the cartel has effec- tively laundered its money and is out of the process, The peso broker must tions of drug trafficking and the money- laundering schemes, which use a process notably home appliances, con: sumerelectronics and cigarettes — for export to Colombia, is the biggest, most efficient money-laundering system in the Western Hemisphere, gover off. ¢ials say. ‘ pliances, consumer electronics, li quor, cigarettes, used auto parts, pre- panies place orders for U.S, goods and make payments through the peso broker. Again, the broker uses contacts in the United States to buy the re- quested goods from legitimate U.S. manufacturers and distributors, The broker pays for the goods using a va- riety of meth including bank accounts he has in the United States. @The purchased U.S. goods are shipped to Caribbean or South American destinations, sometimes through Europe or Asia, then smuggled or now launderthedollars he has accu mulated in the United States. MThe peso broker uses his con- counterpart designed to aid investiga ucts cious metals and footwear. The Colombian importing com: agreementwith the cartel, in which he agrees to exchange pesos he has in Colombia for dollars that the cartel as paymentfor legal goods they makeand It's a sophisticated variation on the der anestimated $5 billion a year in illicit profits: @ The cartels export drugs to the United States, where they ave sold for @ In Colombia, cartel operatives contact a third party, known as a peso broker, to launder the drug money. @ The peso broker enters into an launderan estimated $5 billion a year in illicit profits. basic process of money laundering, in which illicit profits from criminal activ. ities are moved througha series of bank accounts to make them appear to be legitimate business proceeds, The black-market peso eee which involves purchases of U.S. prod: Colombian companies that legiti mately import U.S. goods, The U.S. goods often are home ap- scheme,called the black-market peso exchangesystem, to evade Colombian currencyandimporttariffs and laun- U.S.dollars. tels use legitimate international trade to known as the black-market peso exchange system. How the Black Market Exchange System Works The U.S. Customs Service says Colombian drug cartels use this complex Raymond Kelly “This is a perfect system,” Kelly said inarecent interview. “It ostensibly looks like a legitimate business deal.” He said his agency is working “tolet US, exporting companies know about the danger.” ere peso brokers, who act as in the scheme, Colom: now has a pool of money in the United States to “sellto te and smuggle them into Colombia on i= nt m doesn’t frighten What’s New About the highpovernmeat trilandkee’ on ocelen cosreaicy exchenaes, un darove Lpperv by toms agents into the Mateus in July |