Predictions: Win Some, Lose Some...


Editors Note: Other publications and Web sites offer their annual lists of predictions at the beginning of the new year. But how many of them actually reprint what they predicted after the year is over? We at BW Online believe in transparency, humility, and full disclosure. So here's what we predicted last Jan. 4 for 2000. As you'll see, some of our soothsaying was remarkably prescient -- and some of it, well, read on...

Predictions, Hunches, and Wild Guesses for 2000

A 12500 Dow at yearend, a three-peat by the Yankees, Jenny Craig dumps Monica

Lewinsky...

What will the New Millennium bring? Now that it's finally here (seemed like it took at least 1,000 years), Business Week Online asked our far-flung network of correspondents and editors to make some smart -- and some

whimsical -- predictions for 2000. Here they are:

POLITICS/GOVERNMENT

Republican John McCain and Democrat Bill Bradley will win the Feb. 1 New Hampshire primary.

McCain: Yes. Bradley: No.

But a GOP ticket of George W. Bush and Thomas Ridge (the Pennsylvania governor) will beat the Democratic ticket of Al Gore and Bill Bradley (Gore's Vice-Presidential choice) in November.

Bush won, didn't he? As for the Veep predictions, if only Bush and Gore had taken our advice...

Democratic Leader Richard A. Gephardt (D-Mo.) will become the next House Speaker when the Democrats retake control of the House of Representatives in November. Dejected House Republicans, declare, "We have accepted the voters' judgment, and we know we have to change our ways," and then respond by hiring ex-Speaker Newt Gingrich as a paid "message consultant."

Republicans hung on: 221 to 212. We were just joshing about the Gingrich stuff.

The Senate remains in GOP hands.

It's a 50/50 split, but Vice-President-Elect Cheney makes a GOP majority.

The Reform Party will disintegrate amid internal squabbling. Donald Trump never runs for President, but he runs to the bank to cash in on all the free publicity he generates for his new book and his casinos.

The Reform Party splintered into two warring factions, but the Reform Party banner was carried into the November elections by Presidential nominee Patrick J. Buchanan, who received a scant 0.4% of the national vote. As for Trump, he never ran for President. As for running to the bank, only he knows.

The Federal Reserve will raise interest rates three more times in 2000 -- a reflection of America's continued strong economic growth. President Clinton will reappoint Alan Greenspan to a fourth term as Federal Reserve Chairman. But Clinton's nominee to a vacant Fed governor's seat, Carol J. Parry, won't be confirmed by the Senate. Republicans will resist, hoping that a Republican wins control of the White House and can then make the appointment (smart move, see prediction above).

Bingo! This all actually happened: As for rates, two quarter-point increases were followed by one half-point hike.

Hillary Rodham Clinton will lose to New York Mayor Rudy Giuliani in the race for New York's Senate seat. Ebullient in victory, Giuliani celebrates by ordering evictions from all of Manhattan's homeless shelters.

Clinton beat out Republican candidate Rick Lazio. But hey, who knew Giuliani's health would cause him to withdraw from the race?

INVESTING

Dow Jones industrial average on Dec. 31, 1999: 11,497

Dow Jones industrial average on Dec. 31, 2000: 12,500

Actual on Dec. 29, 2000 (Dec. 31 was a Sunday): 10,786.85

Nasdaq Composite on Dec. 31, 1999: 4069

Nasdaq Composite on Dec. 31, 2000: 4500

Actual: 2470.85. We know. We know.

Internet stocks will be convulsed by a major shakeout in the first quarter of 2000, but companies such as Yahoo!, Amazon, eBay, and American Online will emerge from the tumult as industry leaders. Hundreds of small, unprofitable operators will be forced to close up shop.

BW Online was ahead of itself on this one. The market collapsed in March, and the shakeout intensified in the second half of 2000. Look at what's happening right now. Hundreds of dot-coms are on the ropes, but so far the industry leaders are weathering the storm.

BUSINESS EVENTS

Software manufacturers will experience a significant falloff in revenues in 2000, since most of their clientele have cleaned out their piggy banks to pay for Y2K upgrades in 1999. Only big companies will be spending on significant software development in 2000.

Right on. Software companies like Microsoft (MSFT) and Oracle (ORCL) disappointed in 2000, though their dropoff had less to do with Y2K spending than with the PC slowdown in the second half of the year.

The pressure for free Internet service will intensify in 2000. More and more service providers will be forced to cut prices or give it away, changing the dynamics of many Internet businesses. America Online's stock could be rocked for a while as a result.

Pressure for free service continued in the first half of the year. But in September, free ISPs such as Spinway, AltaVista, and Firststop hit some financial bumps. Since then, the rush for free access hasn't been as frantic. "ISPs found that these business models don't really work," says Bruce Kasrel, an analyst with Forrester Research.

At least one long-distance phone-service provider will offer a rate of 3 cents a minute in 2000.

Bigzoo.com, a Los Angeles ISP shaved long-distance rates to 2.9 cents -- but only in certain areas. Most major phone companies stuck with 5 cents.

Amazon.com still won't turn a profit. It could even be forced to do another stock offering, as it begins to run out of money, and banks balk at anymore lending.

The company remains in the red. But the book-and-music arm turned its first profit in 2000.

Boeing and Merrill Lynch will stage turnarounds in 2000. They'll both post higher-than-expected earnings performances.

Boeing climbed 60% year-to-date, from $40 a share on Jan. 1 to $66 as of Dec. 29. Merrill Lynch climbed 62% year-to-date, from $41 a share on Jan. 1 to $67 on Dec. 29. The Dow finished down 5% for the year.

Douglas Ivester is gone as CEO of Coca-Cola, but the global recovery will give Coke's stock some lift in 2000 under new CEO Douglas Daft. Its share price will hit $75 by Jan. 1, 2001, a gain of about 28% from today.

Coke's stock price closed at $61 a share on Dec. 28, 1999 (last day of trading). It closed at $61 a share on Jan. 2, 2001 (first day of trading). So much for updrafts.

Who will succeed Jack Welch as CEO of General Electric? Keep an eye on Jeffrey Immelt, head of GE Medical Systems. Immelt has proven to be a whiz at gobbling up acquisitions -- 35 in the last two years. He has ramped up sales, and he shares Welch's love of the deal. And where did both start out? Think one word: plastics.

Bingo! On Nov. 27, Jeffrey R. Immelt was named as Welch's successor.

Chances that mediation Judge Richard Posner can work out a settlement between Microsoft and federal trustbusters before spring: 33%. Chances that Judge Thomas Penfield Jackson will rule against Microsoft if the case doesn't get settled: 100%. Chances that the case will be settled before reaching the Supreme Court: Even.

There was no settlement. Judge Jackson did rule against Microsoft. And most analysts don't expect an appellate court ruling before March, 2001.

After failing in its bid to take over Sprint. BellSouth will make a bold acquisition move in Europe. Best bet: Dutch phone company KPN, which BellSouth just joined with to buy a German wireless carrier.

Nope. BellSouth never made any bold acquisition moves.

MCI WorldCom's CEO Bernie Ebbers will allay fears of federal trustbusters and succeed in his bid to buy out Sprint, but only after giving up Sprint's stake in the Internet backbone and a significant chunk of Sprint's long-distance customers.

Oops. Federal trustbusters won this one. Ebbers gave up on acquiring Sprint.

GLOBAL BUSINESS

Several European nations will have political crises in 2000 over whether to stick with the euro.

For the most part, countries stuck by the euro, despite its problems. But Denmark had a mini-crisis when voters rejected joining the euro through a referendum. The government, most political parties, banks, and Big Business were all strongly in favor.

Watch for the first significant cross-border bank merger ever in Europe -- probably involving a Spanish and French bank.

It didn't happen, but not for lack of trying. The Bank of Italy scuttled a deal between Banco Bilbao Vizcaya Argentaria of Spain and UniCredito of Italy. Now, pundits say it will be at least two years before there is a big cross-border merger.

Indonesia will continue to be rocked by political and economic turmoil.

Problems within the country's banking system and its agricultural sector shook the economy in 2000. In the province of Aceh, a summer cease-fire failed, and the rebel Free Aceh Movement continues to fight for a free Islamic state.

On Aug. 7, the BBC broadcast a series on the strife called: Indonesia's Anemic Revival.

SPORTS

Winner of the 2000 Super Bowl: Indianapolis Colts.

Oh, brother. The St. Louis Rams beat the Tennessee Titans, 23 to 16.

Winner of the 2000 World Series: New York Yankees (in a sweep, of course).

Yes, the Yankees pummeled the Mets, 4 games to 1. (But the victory fell just short of a sweep).

ENTERTAINMENT

Winner of the 2000 Oscar for Best Picture: The Green Mile, the latest Tom Hanks feel-good movie. The film is based on a novel by Stephen King, who was involved in a debilitating car accident last summer, so sympathies will be running high. And the Academy of Motion Picture Arts & Sciences, which loves actor Hanks, can't give him another Oscar for best actor so soon (he won back-to-back Oscars in 1994 and 1995, for Philadelphia and Forrest Gump).

Maybe we ought to stick to business, economics, and policy from now on. An unsettling portrait of suburbia took the prize. Best Picture: American Beauty.

FASHION

Despite concerns of clothing designers, the women's suit jacket will survive in 2000. But men's ties won't -- because of the way the Internet companies are more lenient in their dress codes than traditional businesses. Between dress-down Fridays, dress-down summers, and the casual wear typical at most New Economy companies, men's suits will finally lose their hold in the workplace. Casual office wear will increasingly become the mainstream uniform.

Jackets for women stayed hot, and suits and ties definitely lost their luster for men. Dressing down in the workplace has become commonplace.

Designers will try to drive hemlines down in 2000, but women will resist. Hemlines won't drop until 2001.

"Hemlines stayed high," confirms Mari Davis, editor of Fashionwindows.com.

ETC.

Researchers will discover how to increase the intelligence of human offspring through gene therapy. An ethical controversy will ensue.

Not yet -- but wouldn't that be something!

There will still be no indictment in the JonBenet Ramsey murder case in 2000.

Still waiting...

Jenny Craig diet centers drop former White House intern Monica Lewinsky as corporate spokeswoman after a disappointing three-month stint.

It took Jenny Craig just five weeks to drop the ex-intern. Monica's latest venture: designing handbags.

Here's to the old year. Now on to the next!

Tomorrow: Predictions for 2001.


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