Where's The Money Coming From?

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There isn't a day that doesn't go by that a big corporation states that it's costing them millions and millions of dollars to fix their computers to be Y2K compliant. Since this money is coming out of corporate earnings, why would anyone want to invest in company who is spending that kind of money. I'm wondering if the feds will step in and tell people they can't sell their stock thus avoiding a stock market collapse?

-- Candace (Candace@jpps.com), February 22, 1999


Actually, the exact opposite may be true. Any medium or large company which is technology-dependent and which at this point claims to NOT be spending a significant amount of money on Y2K is probably not addressing their issues or is so far behind that they are clueless. Why would anyone invest in a company which is most likely being negligent?

I've seen 10-Q statements from companies employing 2,000+ employees which claim to be spending less than 1 million dollars total on Y2K remediation. This is either creative bookwork or ignorance of the size and scope of the problem. Either way, it should give investors pause to stop and reconsider.

-- Arnie Rimmer (arnie_rimmer@usa.net), February 22, 1999.

It all depends on the size of the company and its age. A company founded in 1995 is not going to have much investment in old mainframe software. And all their PC's and routers and such will be almost certainly be compliant. Cost of compliance - nil. Company I work for was founded in late 93. They don't waste much time worrying about Y2K problems.

As for where the money comes from in big corporations - usually it is an addition to the IS budget. Generally the increases have run 25% to 50% above the old budget when taken over the last 5 years. In other words, by the size of the company, it is generally not a crippling amount by any means. Just looks big to us smaller fry.

My favorite example - a while back some people were howling about the cost to go over and remediate oil tankers. Ranges from 60k to 500k depending on the tanker. Sounds like a lot. 100k won't even pay for a tank of gas for one of those babies. Put things into perspective.

-- Paul Davis (davisp1953@yahoo.com), February 22, 1999.

Heard a theory over the weekend (the Prophecy Club's Y2K tape) that the amount of money being publicly budgeted is an amount that sounds reasonable to the investment community (not too high, not too low). The theory goes on that the amount spent against what was budgeted may not say much because (1) it may not be possible to put together a realistic budget on a particular Y2K job, and (2) costs can be expensed in interesting ways.

-- Brooks (brooksbie@hotmail.com), February 22, 1999.

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