Software industry consolidation picks up

NEW YORK, Dec. 31 (UPI) -- The consolidation of the software industry has been predicted for more than two years, since the dot-com bubble burst, but now it might be in progress.

While the overall U.S. mergers and acquisitions market is down, there's been a steady stream of large and small software deals in the past month, the Wall Street Journal says. There's eagerness among buyers to take advantage of current prices, the paper says, to the point where some pay "significant premiums." The shares of some companies being acquired are trading as much as 99 percent below their record highs.

The newspaper says that 64 software deals were completed from January-October vs. 163 for all of 2000. But potential buyers have stabilized their own businesses and are comfortable about expanding again to fill gaps in their product lines and technologies. At the same time, potential targets -- many of which went public during the boom -- are realizing they can't stand alone any longer and are cutting their asking prices.

Markets are less volatile, too, making it easier to complete a transaction.

The new 'R' word in Washington is reflation

WASHINGTON, Dec. 31 (UPI) -- Inflation, deflation and disinflation are the concerns that have driven policy-makers in the past.

But the Wall Street Journal says there's a new watchword for 2003: reflation.

From the 1970s through the 1990s, U.S. policy-makers "waged a persistent battle against inflation ... But for most of this year, as the inflation rate has fallen closer to zero, economists began to worry about the opposite trend -- the possibility that the United States could face Japan-style deflation, or falling consumer prices."

Now the idea is reflation -- government efforts to restart a weak economy by flooding it with money. "Essentially, reflation is the intentional effort by governments to ward off deflation by boosting demand and underpinning prices. Though it isn't quite the same as inflation, reflation can spark inflation problems if policy makers go too far," the Journal says.

Behind the focus on reflation is "blunt talk by Federal Reserve officials," especially a recent speech by Fed Chairman Alan Greenspan in New York. During that speech, he said that while deflation in the United States was a remote possibility, the Fed was "extraordinarily sensitive" to its potential dangers and would forestall it if the economy moves further in that direction.

The Journal says Fed-watchers believe the Fed will go to "great lengths to head off a broad downdraft in prices."

U.S. bankruptcies set record in 2002

NEW YORK, Dec. 31 (UPI) -- For a second year, U.S. corporate bankruptcies reached record levels.

"The combination of massive accounting fraud and the free spending of the past decade has brought down a string of household names in the past year, including five of the 10 biggest collapses on record," the British Broadcasting Corp. reports. It says that in 2002, there were 186 bankruptcies of public companies, with $386 billion in assets.

Of the five biggest failures, four featured accounting trouble, it said. There was phone company WorldCom, whose $104 billion in assets "made it the most expensive collapse in history." Conseco, Global Crossing and cable company Adelphia Communications also faced allegations of accounting problems.

"Only UAL, the parent of United Airlines, found itself in trouble solely for business reasons," the BBC said.

It said that in 2003, problems might arise for power companies or in retailing and fast food chains.

Survey: U.S. small business outlook improves

WASHINGTON, Dec. 31 (UPI) -- The percentage of small business owners who expect better economic conditions in six months rose significantly last month.

The Wall Street Journal reports that the monthly poll of the National Federation of Independent Business found that in November, 47 percent expected a stronger economy early next year, up 10 percentage points from October. The percentage expecting worse conditions fell 3 points to 10 percent.

But capital-spending plans haven't changed. For a third month, 30 percent of the companies said they had such plans. During the boom years of 1995-2000, the usual figure was 41 percent.

In terms of economic policies, the Bush administration got a 52 percent approval rating, although Congressional economic policies were favorably viewed by only 12 percent -- despite the results of the November election.

China grew 8 percent in 2002; will slow

BEIJING, Dec. 31 (UPI) -- Government investment and strong exports helped China's economy grow 8 percent this year vs. 7.3 percent in 2001, despite a global slowdown.

But a rising budget deficit could hamper growth next year, the Wall Street Journal reports. It said that a top official of the National Bureau of Statistics put gross domestic product at $1.232 trillion this year, with industrial output growth at 12 percent.

While he didn't give estimates for exports or investment, growth in these areas "has underpinned a manufacturing boom this year that not only spurred China's overall economy but also reshaped global trade patterns" through exports.

However, the Journal says, economists believe that export and investment growth -- both of which averaged more than 20 percent through November -- don't look sustainable in 2003. "China's exports will be hard-pressed to match this year's base of growth, as its biggest markets, the United States and Japan, struggle to recover. At the same time, the government's expanding budget deficit, now at about 3.5 percent of (gross domestic product), is tempering a desire for another year of supercharged growth."

SBC enters California long-distance market

SAN JOSE, Calif., Dec. 31 (UPI) -- SBC Communications began signing up long-distance customers in California on Monday within hours of getting final regulatory approval to enter the state's $10-billion-per-year long-distance market.

The Mercury-News reports that the state's Public Utilities Commission voted to allow SBC to offer the service by a 4-1 vote. It had previously won federal approval.

The company, which already provides local telephone service to more than 90 percent of California residents, almost immediately began to offer an array of long-distance plans with domestic calling rates ranging from 2 cents to 10 cents per minute.

SBC spent nearly five years gaining permission to enter the California long-distance market. Under the Telecommunications Act of 1996, SBC first had to convince regulators that it is sharing its monopoly local phone lines with rivals such as AT&T and MCI before it could begin selling long distance.

The newspaper says SBC "enters California's long-distance market with an established brand name, a massive base of existing customers and knowledge of those customers' calling patterns."