Let's not be ashamed of TMT - not completely

TMT. Remember when that phrase was used all the time? It sounded dynamic - like TNT, which we all know is explosive stuff, and the similarity was no accident.

It was back when it seemed stocks related to IT, the worlds of old and new media and telecoms could only go one way. That way was up, and up because of changes being wrought in these sectors thanks to the influence of something called the internet.

How times have changed. Of course the internet is nothing special now for most organisations, and that's a good thing. It has merely helped companies progress, to do things more efficiently or exploit new channels. You know the spiel.

But the shine is well and truly off TMT - though not so much in one sector. Can you guess which it is? Events this week tell us.

The power struggle, write-down and share price slide at AOL Time Warner show us old media - recently considered full of such boring, uncreative industries as movie-making, music and cable TV - is actually just as sexy as the new online world embodied by AOL. And it's still much more profitable.

Cue Bob Pittman's exit at AOL-TW. The old guard have won that battle. Steve Case, the driving force behind the growth of AOL, may still be that company's chairman, but Pittman was his closest ally, a man respected for his cross-media savvy and for growing MTV in the 1980s. Only he came from the wrong side of the tracks, ultimately.

The same arguments for old over new could be made at Vivendi-Universal and doubtless elsewhere.

On the telecoms front, the picture is just as depressing. There is the odd bright spark. Nokia still sells handsets at margins most CEOs drool over and there is hope for things like MMS messaging, but the overall business of selling equipment to operators who then sell voice minutes and data bits is in a virtual mire.

This morning's Q2 report from Ericsson shows this. There are other recent examples such as Motorola (record losses) and Nortel, and more sure to come. All this is against a backdrop of failures such as KPNQwest and scandals like WorldCom - expect other companies to air their dirty laundry soon.

No, the one sector that can hold its head high, at least some of the time, is our old friend IT. It's hard to separate it from communications and media much of the time, and there are incontrovertible blots on the landscape - PC sales, dot-com failures, ASPs, B2B software vendors to name a few - but the computers and related products many silicon.com readers deal with day-to-day represent a sector that is still okay - just.

There are plenty of software and hardware companies struggling, but a look at the bottom lines of giants such as Intel, Microsoft and Oracle shows us there is a core at the heart of TMT still making money, still central to nearly all the day-to-day business we do.

That may not be much - especially to those of us with nothing to do with them, or those who have seen investments shrink in the guise of these companies' shares - but it's something, and it's what will be at the heart of an eventual recovery.

Only when that happens, let's not go on about TMT all the time, okay?