Magazine article Talent Development


Magazine article Talent Development


Article excerpt

The e-learning corporate sector: Has it bottomed?

That is the question echoing on Wall Street, around the water cooler and from investors. Some experts believe recent marker momentum may fade to retest the April bottom, but then rise again as technology stocks gain speed in the second half of the year. That growing confidence on the part of institutional investors is based, in part, on recent Federal Reserve rate cuts and the approval of President Bush's roughly $1.4 trillion tax cut.

From a historical perspective, the five 50-basis-point rate cuts by the Fed do have positive implications. Periods following such Fed easing have spurred strong market performance. Since 1980, Standard and Poor's 500-stock index has climbed almost 19 percent on average in the 12 months following interest-rate cuts, during which growth stocks, particularly in the technology sector, have excelled. It's important to note that the corporate sector of the Jefferies & Co. Knowledge Service group and, more specifically, the e-learning segment of that sector are tied to the economy and movements in technology stocks.

With the market correction, portfolio managers and CEOs reevaluated the impact of the Internet's power as a channel and of the industries that will benefit from the Internet the most. We believe those to be knowledge-based industries such as financial services, entertainment, health care, government, and education. Even though educational content delivered over the Web is somewhat impersonal, it has the best nearterm fundamentals and economics for companies to benefit from financially. The opportunity to digitize proprietary content for internal or external use by corporations or educational institutions is phenomenal.

All of the other industries mentioned have impediments to implementation and eventual success: Doctors often fight the release of medical information, governments are slow to implement and constrained by cost, financial services firms have security issues, and entertainment content is often commoditized.

In our view, education will be the first and most successful industry to capitalize on the Web. Online learning providers will play a critical role in the transformation of communication, delivery of information, and efficiency of business practices--which will have a tremendous long-term impact on economic growth. Studies by the Brookings Institution indicate that the Internet could add 0.4 percent to annual U. …

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