Stocks are up this morning - up 56 points a half-hour after the open - thanks to a higher-than-expected durable goods report. In real-speak, that means that heavy equipment and bulk manufacturing buyers broke open their checkbooks last month and bought more bulldozers and crates of metal than Wall Street thought they would
It's a nice piece of news for the economy but I wouldn't get too excited - a lot of investors are awaiting next week's gross domestic product number and past that, I don't think we'll see a real bounce back until after Labor Day and more so after November 1, especially if the media gets its way and their messiah Obama is elected president. At least then we'll stop seeing economic headlines from the AP written in the newest font on the printing block - Scary Transylvanian.
Otherwise, an interesting piece of news out of China today is worth discussion - especially to U.S. tech companies.
According to the China Internet Network Information Center, over 253 million Chinese are using the Internet, the highest number ever for the country. What's more, the share of the Chinese public using the Internet is still just 19.1 percent, giving western technology companies a huge opening to exploit. Already, companies that supply technology infrastructure like SAP, IBM and Microsoft are making hay overseas, tempering their losses here at home with big gains in countries like India, Russia, Brazil and now China.
In contrast to the 253 million Chinese using the Web, the U.S. only had an estimated 223.1 million Internet users in June, according to Nielsen Online. The Pew Internet and American Life Project puts U.S. online penetration at 71 percent. Says the China Internet Network, "This is the first time the number has drastically surpassed the United States, becoming the world's No. 1."
Of course, U.S. technology companies face entrenched competition from Chinese companies. Says the Associated Press today, "In financial terms, China's market lags those of the United States, South Korea and other economies. But online commerce, video sharing and other businesses are growing rapidly and have raised millions of dollars from investors.
The commercial boom has produced success stories such as games site Tencent.com and search engine Baidu.com, which are competing with foreign rivals for local market share. Baidu said Thursday its profits in the latest quarter soared 87 percent over the year-earlier period to 265 million yuan ($38.6 million)."
Even so, the opportunity to glom on to a rapidly-growing tech market will surely attract more U.S. technology companies with deep pockets.
According to the research firm Analysis International, total revenues for China's Internet companies reached 40.5 billion yuan ($5.9 billion) in 2007, up 48.6 percent from 2006. AI also says that Chinese internet revenues should keep growing at an annual rate of at least 30 percent in coming years, reaching 137.5 billion yuan by 2010.
Another interesting - maybe eye-opening number - comes from BDA China Ltd., which says China's online population should keep growing by 18 percent annually, reaching 490 million by 2012 -- a number larger than the entire U.S. population.
Add it all up and expect that, five years from now, there's going to be a lot of money in the pockets of western technology companies thanks to the Chinese. Keep that in mind when you next look at your investment portfolio.