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INTRODUCTION
Industry Outlook 2004
Industry Outlook Photo Essay
INFORMATION TECHNOLOGY
Software: Pay-As-You-Go Is Up And Running
>>Selling software as a service over the Net will help revive the sluggish industry
>>Security and design & engineering software will grow at double-digit rates
Accounting: Sarbanes-Oxley Sparks A Software Boom
Hardware: Computers Get Their Groove Back
>>Big companies are spending again, eager to update antiquated systems
>>PCs and peripherals are heating up -- but server profits will be squeezed
Chips: This Boom Is Just Powering Up
>>Economic recovery will further boost demand-and prices-across the industry
>>New chips from Intel and AMD are set to fire up Wi-Fi and computing
Services: Farming It Out At A Faster Pace
>>Tech-services outfits will see more business, though the rate of growth will slow
>>Companies will keep moving work from the U.S. to lower-cost areas overseas
Consumer Electronics: Free-Falling Prices And Rocketing Sales
>>Multipurpose DVD devices and MP3 players are poised for banner years
>>The entry of Dell, HP, and Gateway will intensify the competition
Telecommunications: Strong Signals The Bad Times Are Over
>>U.S. telecom companies will boost capital spending for the first time since 2000
>>Markets for IP-based networking technology are ringing up sales
LIFE SCIENCES
Health Care: The Patient Will Live, But...
>>Employers and consumers will continue to get hammered by rising premiums
>>But health-care costs will rise a bit more slowly, which is good news for insurers
Pharmaceuticals: For Drugmakers, There's No Panacea
>>Blockbusters are in store, but the cost of R&D, ads, and factory fixes will eat profits
>>Pressure from insurers and government on prices will be a drag on revenues
Biotech: A Comeback "Balanced On A Razor's Edge"
Skeptical investors want to see products that get to market and add to the bottom line
MANUFACTURING
Energy: Prices Hold Their Own In The Oil Patch
>>Rising global output will dent revenues and profits this year, but only slightly
>>The shock of August's blackout has faded, and the grid's upgrade has stalled
Power: Keep The Candles Handy -- And Light A Few
Defense & Aerospace: More Plane Pain, But Help From Uncle Sam
>>Sales of civilian aircraft will be flat, though the worst of the slump may be over
>>High-tech weaponry will be a bright spot for defense contractors
Autos: Can Detroit Break The Rebate Habit?
>>It will be tough to wean buyers from the incentives they're now accustomed to
>>Little pent-up demand and foreign competition will keep a lid on sales of U.S. brands
Construction: The Happy Sound Of Hardhats At Work
>>The best news is that commercial and industrial construction will rebound
>>Higher mortgage rates will slow the residential market only slightly from last year
Heavy Manufacturing: Steeling Themselves For More Hardship
>>Except for metals, which benefited from tariffs, factory demand remains slack
>>While overall hiring is up slightly, thousands of jobs will be cut
SERVICES
Retail: This Rising Tide Won't Lift All Boats
>>Tax cuts will fuel sales in the first half of 2004, but their impact will fade
>>Sustained growth may postpone coming mergers and bankruptcies
Transport: More Business Than They Can Carry
>>Resurgent demand for shipping plus stripped-down capacity will push prices up
>>Small carriers will keep disappearing as big ones tighten their grip
Travel: Folks Are Finally Packing Their Bags
>>The rebounding U.S. economy is already fueling a modest turnaround
>>Airlines will need to keep finding ways to cut costs and avoid overcapacity
Media: Big Media Will Get Even Bigger
>>The urge to merge and a flood of digital media gizmos will keep the industry jumping
>>Music piracy is easing, but movie downloads cost Hollywood $3 billion a year
Advertising: Mad Ave: The Sizzle Will Be a Harder Sell
>>Overall spending will rise, thanks to events such as the Olympics and the elections
>>Marketers may shy away from pricey network TV ads in favor of cable and the Net
Professional Services: Auditors Applaud, Consultants Cope
>>New regulations will boost both the hours put into audits and the fees paid
>>Low-cost competition and fewer new technologies will hold back consulting
Education: The Bleak Writing On The Blackboard
>>State budget deficits will mean stingier spending on public schools
>>The bright spot: Test-prep and tutoring firms are thriving
FINANCE
Banking: It'll Take More Than Free Toasters
>>With the mortgage boom over, bank profits could be less than half of last year's
>>If M&A activity doesn't pick up, Wall Street may be in for a tough slog
Mutual Funds: In the Scandals' Wake, A Raft Of New Rules
Insurance: From Perfect Storm To Nearly Perfect
>>Few catastrophes and strong investment returns are boosting profits
>>More consolidation is likely as players jostle for market share
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Copyright 2004, by The McGraw-Hill Companies Inc. All rights reserved.
