There are plenty of executives out there who will tell you a tech recovery is on the way, but Leo Hindery isn't one of them.
As CEO of
, the network that George Steinbrenner set up to push cable TV operators for the right to televise New York Yankees baseball, Hindery might not seem the best-placed prognosticator on tech. But given his well-chronicled penchant for staying a step ahead of disaster, Hindery's semiannual assessment of tech, telecom and media tends to command attention from some financial trend spotters.
On Monday night, Hindery again delivered a sobering message. The nation's economy is threatened by a "pervasive overcapacity" in nearly every market, Hindery told a dinner hosted by securities firm Friedman Billings & Ramsey. And with few antidotes available to combat the tech and telecom glut, the 55-year-old executive says investors should prepare for more big, expensive failures.
Take communications gear, for instance, an industry in which a vast supply of equipment far outstrips feeble demand. Though the big players in the sector continue to struggle gamely to remake their floundering businesses, at the end of the day there's simply not enough money to keep staid old-line outfits afloat, Hindery warned.
fail," Hindery said of the struggling equipment makers. "They just disappear."
That said, the executive's pessimism isn't limited to information technology. Indeed, he sees problems that will continue to hamper the entire tech sector. While some observers are now willing to believe the two-year tech recession may be nearing an end, Hindery is focusing on ominous signs like an estimated $600 billion in outstanding telecom debt, and an unemployment rate closer to 7.1% if you include those jobless who have fallen off the official claims tally.
Hindery has headed up a variety of cable TV, undersea fiber and Net storage businesses over the past decade and a half, giving him an unusually broad perspective on the common problems afflicting a host of stumbling industries. That experience paid off for those who listened to him during the Internet boom, when he began saying many New Economy business models were doomed to fail.
Hindery's wide-ranging career path started with the creation of a cable TV company in 1988. He abruptly jumped out of cable in 1999 while he was the head of
, which is now being sold to
A few months later he was tapped to run
, the Web hosting arm of the now failed undersea network shop
. Hindery was chief executive for both Global Crossing and Global Center when Global Center was sold last year to
, which is now restructuring under Chapter 11 protection.
Hindery has been in the spotlight lately for being listed as one of the recipients of Goldman Sachs IPO shares. His name also came up in connection with congressional hearings on whether outfits like Global Crossing and
mislead investors and employees while executives like founder Gary Winnick were dumping the stock. Hindery supplied memos dated June 2000 that made it clear that Global Crossing was doomed and that selling to another telco was its best option.
Hindery recently has been mired in a high-profile standoff with
over terms to televise Yankees baseball games. On that front, Hindery predicted the battle probably would be settled in court.
The last time Hindery spoke before a similar crowd, in March 2001, he
cautioned that telecom's impending slide would help bring the entire economy to its knees. Now that his prediction looks to be correct, he offered some suggestions to help remedy the problem.
Hindery says tax and interest-rate cuts aren't the answer. He says to "reignite" the economy, the government has to spend heavily on things such as infrastructure, bridges and highways.
Just guessing here, but maybe then, when we reach an overcapacity of roadways, the economy will have had time to absorb all the other surpluses.
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