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April 29, 2002—The Ground Is Shifting If You're Listening

10 Quakes a Day. Last week we posted the Geologic Survey's very current earthquake map for San Francisco on the Global Province (see Global Sites). Whenever we peek at it, we find 30 or 40 shocks in the Bay Area for any four-day period. That seems to work out to 10 quakes a day.

Lately the Northeast is trying to compete, part of its unstated horserace with California. Last weekend's news reported 5.1 richter-level seismic events with a fissure here, a tear in the fabric there, and a loss of a foundation here and there. The clatter we hear in New York City is not always a subway or a demagogue from the outer boroughs.

$54 Billion and Counting. Another seismic shift was recorded in the City.  AOL Time Warner (NYSE:AOL; www.aol-timewarner.com) got the attention of the markets on Wednesday by reporting a quarterly loss of $54.2 billion, the largest ever for a business in U.S. history, eclipsing JDS Uniphase's (Nasdaq:JDSU; www.jdsuniphase.com) piddling $41.8 billion. As Senator Dirksen of Illinois was wont to say, "A billion here and a billion there and sooner or later you're talking real money." Analysts actually pushed the stock higher, since earnings (the way they count them) before special charges came in higher than they expected. Cash flow, we remind you, is still in the tank. Did you ever have the feeling that we are in an era of funny money and plain weird accounting?

More Tremors Around. There's lots of other big stuff that's escaping our attention, overcome as we are by the din of war, cable TV, and assorted scandals. Recent studies out of China, for instance, tell us affluence is already having its way with the people: blood tests show that surprising numbers are pre-diabetic and pre-coronary, the output of fast food and other habits of people on the rise. We can expect an epidemic of affluent disorders as part of the economic miracle.

And the old reliable Wall Street Journal, meanwhile, looks to have made a complete hash of a recent redesign, the world's best newspaper fast turning into a confusing mess where it is plain hard to find the goodies you are looking for. Sadly, the WSJ has shown an aptitude for snatching defeat from the jaws of victory for the last 10 or 15 years. Even its online newspaper, of which it is so proud, is taken to be a strategic mistake by Peter Drucker, if we remember correctly. The Journal's missteps, too, are unnoticed except by a few big investors who want to take over the paper and break it up.

Our Annual Report 2002. Well, we are just doing our annual on annuals 2002, and you might think at first that it is a repeat of the story we told last year. More troubled companies all over are using the universal nostrum of cost-cutting. But there are all sorts of changes afoot as well. GE and IBM, for instance, are providing some unprecedented extra-voluntary disclosure in order to assure investors that the companies are not standing on quicksand. The big annual report news this year is that corporate moguls are trying to reassure us (and themselves) that their get-up-and-go has not got-up-and-went.

We also found that Wal-Mart became the nation's grocer last year, taking over first place from all the ordinary retail chains, who simply don't know what's hit them. While we were napping, the Boys from Bentonville simply created a second whole business inside the old one.

Keep an Ear to the Ground. A lot of big things are happening but you won't see them on TV. Keep an ear to the ground, maybe keep your eyes shut, and you might just hear the tectonics at work.  Here lies great opportunity if you're listening.

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