Earnings Get Tech Support

Despite endless protests from each side, bulls and bears agree that "it's different this time." The 20-year economic boom that we have just lived through has coincided with a 20-year bull market that took the Dow Jones Industrial Average from below 2000 to above 10,000. Returns this steady and this sustained are unprecedented, and by definition that means it's been different this time.

So just how different is it this time ? And, more importantly, are the many differences actually good for the economy, or bad?

Probably the single biggest factor in this economic revolution of epic proportions has been the exponential increase in productivity -- and the coinciding exponential increase in earnings growth throughout the U.S. economy's many industries. That productivity mostly stems from the collection of sectors collectively known as "tech."

While the federal government has tried to measure increases in workplace productivity and cites it at an annual compound rate at 2% to 3% over the last two decades, I'm not sure it has the tools to measure the whole picture. Think of the many ways in which the tech revolutions have enabled and encouraged productivity.

Consider the manner in which we project future revenue and earnings streams for all the companies we look at, including our own. We use spreadsheets. Want to change assumptions about gross margins? Just change it on the spreadsheet. Want to see what happens if you raise prices 5% this quarter? Just do it on the spreadsheet. Now try to imagine how financial employees and analysts used to assemble models. Having come up in this computerized world, I sure can't.

But it's more than that. How about the concept of just-in-time inventory? Or how we access information, instantly on the Internet? How many contacts have you met and/or developed via email and instant messaging?

The New York Times highlighted the "FedEx economy" a couple of weeks ago; the story was all about how quickly companies in the U.S. can respond to changes in supply and in demand around the world. How many prospects have turned into clients for salespeople in every industry because of email? And don't overlook the ability to always shop for almost anything at any time because of the e-tailing (remember that term?). For example, I've spent about 100 times more on music this year than I did in 2002, simply because I can buy songs from Apple's (AAPL - commentary - Cramer's Take) iTunes instantly at any time day or night.

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At time of publication, the firm in which Willard is a partner was net long Apple, Juniper, Intel and Microsoft, although positions can change at any time and without notice.

Cody Willard is a partner in a buy-side firm and a contributor to TheStreet.com's RealMoney. He also produces a premium product for TheStreet.com called The Telecom Connection and is the founder of Teleconomics.com. The firm in which Willard is a partner may, from time to time, have long or short positions in, or buy or sell the securities, or derivatives thereof, of companies mentioned in his columns.None of the information in this column constitutes, or is intended to constitute, a recommendation by Willard of any particular security or trading strategy or a determination by Willard that any security or trading strategy is suitable for any specific person. Willard appreciates your feedback -- click here to send him an email.