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IT HAS become a truism in the last three weeks to say that Scotland entered uncharted waters on 3 May. Minority government and, for the first time, governments of differing political hue in Westminster and Holyrood, mean that for Scotland’s universities it’s a time of double uncertainty.

Universities Scotland - our “trade association” - lobbied hard before the election to get the funding challenges we face on to the political agenda, and was rewarded with manifesto commitments of various kinds from all the main parties. The funding challenges are still there but whether the commitments can easily be fulfilled in the new political environment remains to be seen.

An important conference in Edinburgh next week will begin to frame a solution to this double uncertainty. Organised by Holyrood magazine and sponsored by my university (Abertay), the conference will bring together higher education, business and the public sector for serious debate on what we need our universities to be doing and how they should be funded to do it.

As Universities Scotland’s lobbying made clear, our higher-education sector is a success story, employing 34,000 people, educating 210,000 students and bringing in 381 million in overseas earnings last year.

In research, Scotland punches above its weight, originating around 15 per cent of all British patent applications and securing 11 per cent of all patents granted, despite having only 8.5 per cent of the UK population.

But - and in the circumstances it is a very big “but” - this academic success is not being translated into economic performance and benefits for society at large.

Business investment in R&D in Scotland is only half of the UK average (and 40 per cent of the Organisation for Economic Co-operation and Development (OECD) average). Innovation in Scottish firms is below the UK average, gross domestic product (GDP) growth is lower than the UK as a whole and the share of value added from knowledge-intensive industries is falling behind the UK average.

Business start-up and survival rates are much lower than they should be. Compared to Scotland, output per hour per worker is 30 per cent higher in France, 10 per cent higher in Germany, and 10 per cent higher in the USA.

Something is not connecting and we urgently need to work out why - and what we are going to do about it. We must think carefully and strategically about the kinds of universities and businesses that will help Scotland compete in the global knowledge economy and, just as importantly, how we are going to fund their development.

In the UK, knowledge-intensive businesses now account for around 40 per cent of GDP, but this is well behind most of our competitors. It’s safe to assume the figure for Scotland is probably lower still: why is that, and how are we going to promote the development of more knowledge-intensive businesses?

The knowledge economy has been described as “what you get when firms bring together powerful computers and well-educated minds to create wealth”. Technological innovation combined with rising domestic prosperity is driving the growth in demand for knowledge-based services. Most OECD economies are rapidly approaching the point where knowledge-based organisations and industries will generate the bulk of GDP and employment.

The central premise behind next week’s conference is that universities are the key to improving Scotland’s performance. They are the best means of developing the new intellectual property (IP) needed to fuel the new businesses of the knowledge economy.

They are also the best means of producing individuals with the entrepreneurial skills, energy, creativity, and appetite for enterprise needed to convert that IP fuel into enhanced productivity and prosperity for all of Scotland’s people.

And business demands these graduate attributes: a recent survey by the Economist Intelligence Unit of top company executives and managers asked which skillsets would be most important for competitive advantage in the year 2020. An overwhelming 90 per cent of respondents identified “complex knowledge based roles that require developed communication and judgment skills”, over “simple knowledge and rules-based roles and production roles”.

In the UK, according to the Sector Skills Development Agency, knowledge workers with such skills are an increasing part of the workforce, up from 31 per cent in 1984 to 42 per cent last year - and forecast to grow to just over 45 per cent by 2014.

Westminster is already responding. The 2007 Budget commits UK Trade & Investment to “broker links between investors, regional development agencies and universities to deliver targeted high-level skills” and also proposes a new Commission for Employment and Skills.

The UK science budget is being increased from 5.4 billion to 6.3bn over the next three years in order to - among other things - increase the economic impact of the science base, support the exchange of knowledge and promote economic growth through the work of all the UK’s universities.

We don’t yet know whether the Scottish Executive, Scottish Enterprise or the Scottish Funding Council have begun to consider these issues in the context of devolution and/or independence.

Where, for instance, is there any evidence that the Smart Successful Scotland strategy or its underpinning document, the Framework for Economic Development in Scotland, are being refreshed to fully embrace the reality of the knowledge economy?

Next week’s conference will, I hope, begin to provide some answers to these questions, especially in the context of English universities’ vastly superior funding thanks to top-up fees which are high now and will be even more so in the future.

Whatever the reality of the short-to-medium term political environment, Scotland cannot afford not to consider urgently the true nature of the knowledge economy, what skillsets and modes of university research are required to develop it, and how our universities can be enabled to contribute fully to that process.

Professor Bernard King is the principal and vice-chancellor of the University of Abertay, Dundee.

The “Funding for Success: Higher Education and the Economy” conference takes place at Our Dynamic Earth, in Edinburgh, on Tuesday 29 May. Speakers include: Roger McClure, chief executive of the Scottish Funding Council; Dr Brian Lang, principal of St Andrews University; and David Caldwell, chief executive of Universities Scotland.

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Economies around the globe are putting the pedal to the metal. Companies are flush with cash.

That money tends to burn a hole in the pocket, so businesses are launching capital spending projects. When they decide to build a big plant, pharmaceutical site, refinery or oil drilling rig, a lot of them are calling on Jacobs Engineering Group () to do it.

“It’s the best market we’ve been in in 30 years,” said Jacobs Chief Executive Craig Martin.

Jacobs cuts a wide swath in end markets that it serves. Oil and gas, chemicals, drug companies, bridge and highway construction, and government projects all are key parts of Jacobs’ customer base. It’s diverse enough that if one is down, another is probably up but that’s not an issue now.

“All of their end markets are seeing robust growth across the board, for the first time that I can think of,” said John Kearney, an analyst at Morningstar.

Sales for oil and gas, chemical and drug company projects all surged more than 30% last year. Sales to chemical and drug companies shot up more than 40% in the first half of this fiscal year.

Backlog Growing

Want a sure sign that orders are pouring in? Jacobs’ backlog rose 18% in the March quarter, to $10.7 billion. That’s the biggest catalyst for future growth, says Alex Rygiel, an analyst at Friedman Billings Ramsey.

Oil and gas makes up more than one-third of Jacobs’ sales. Soaring oil prices in recent years have spurred a lot of oil company spending on huge projects, an area of expertise for Jacobs.

“It’s a broader story than oil and gas, but oil and gas are definitely helping a lot,” Rygiel said.

Take refining. That business is expected to spend $142 billion worldwide on capital projects in the next eight years, Martin says. Most are expansions to oil refinery capacity.

“There’s nothing like $70 (a barrel) oil, and the cash flow that creates for our customers, to drive spending,” Martin said.

Jacobs also does a lot of work for governments. A big growth area involves environmental cleanup.

The United Kingdom is about 15 years behind the U.S. in cleaning up federal sites, Martin says. That involves about $300 billion in contracts for top-level contractors.

“We see that as an enormous opportunity that’s just getting started,” he said.

The strength in chemicals is being fueled partly by those companies’ desire to open plants in the Middle East, Martin says. That’s become a region of strength for Jacobs, serving the oil and chemical industries.

Jacobs will likely make some acquisitions to further expand in the Middle East, Martin says. It’s also looking to add capacity and skills in the oil and gas field.

Acquisitions have been a big part of Jacobs’ growth over the years. It typically gets between one-third and one-fourth of its growth from newly acquired companies.

The opportunities are plenty. The engineering and construction market totals $4.3 trillion worldwide, Martin says. But no firm has as much as 1% of it.

“We can grow through acquisitions for at least the rest of my career,” the 57-year-old Martin said.

Jacobs strives to operate locally for its customers. So rather than bring business back home, it puts people on the ground in Europe or the Middle East. That sets it apart from most rivals, Martin says.

It also controls costs well, says Kearney. That’s a sign of how strong its management is.

“Jacobs is probably one of the best-managed firms in the space,” he said.

That’s reflected in its return on invested capital, which has topped its cost of capital in each of the past 10 years, Kearney says.

Its results show that strength. Fiscal second-quarter earnings jumped 49% to 55 cents a share. Sales rose 14% to $2.1 billion. Analysts polled by Thomson Financial expect earnings for fiscal 2007, which ends in September, to soar 39% to $2.23 per share and to gain 17% next year to $2.60.

Jacobs counts its business model as giving it a competitive edge.

It gets 75% to 80% of its business from long-term customer relationships. That’s the flip side of the rest of the industry. Most rivals go after jobs piecemeal, focusing on bigger projects rather than repeat customers.

Small Jobs

But Jacobs will take a small job that repeats in good times and bad in order to get the big job later from the same customer.

“It works for them and it improves the predictability and consistency of their results,” Rygiel said.

It also helps carry Jacobs through the industry’s down cycles. The good times are rolling now, but that will end at some point.

“We’re constantly worried about when this buoyant market will end,” Martin said.

He doesn’t see any signs of a quick reversal, but high oil prices are driving a lot of business. A shock to oil could slash spending in that industry.

That’s where Jacobs’ diverse base of loyal customers comes in.

Reliance on a small group of customers is a risk, Rygiel says. But while Jacobs gets 80% of its sales from about 50 customers, says Martin, those companies are in diverse markets.

And for now, the industry is in the catbird seat.

“There’s probably more work out there than these guys can take on,” Kearney said. “They can almost pick and choose their projects.”

SAN FRANCISCO - EBay Inc. is trying to wring more money out of every customer and purge the online auction site of shoddy sellers, a business strategy that executives say has already pumped profits.

The company reported Wednesday that first-quarter profit surged 52 percent, trouncing Wall Street expectations thanks to big-spending shoppers overseas and scorching performance of its PayPal electronic transaction division.

EBay earned $377.2 million, or 27 cents per share, for the three months ended March 31, compared with $248.3 million, or 17 cents per share, in the year-ago period. First-quarter revenue totaled $1.77 billion, up 27 percent from $1.39 billion a year ago.

Excluding charges unrelated to ongoing operations, eBay earned $460.5 million, or 33 cents per share, up 34 percent from the same quarter last year.

On that basis, which does not comply with generally accepted accounting principles, eBay was expected to earn $408.72 million, or 30 cents per share, on sales of $1.72 billion, according to analysts polled by Thomson Financial.

EBay reported the results after markets closed Wednesday. Its shares climbed $1.23, or 3.6 percent, in extended trading after closing down 75 cents to $34.45 on the Nasdaq Stock Market.

The first-quarter gains came despite lackluster growth in the total number of listings on the worlds largest online auction site. Users posted 588 million listings last quarter, up only 2 percent from the 575 million in the year-ago period a far smaller growth rate than eBay typically records.

EBay President and Chief Executive Meg Whitman said slower growth was the logical outcome of an ambitious effort to reduce the amount of overpriced commodity items that clog the site. Last year, the site was clogged with thousands of cell phone chargers, chintzy digital cameras, outdated MP3 players and other electronic devices and they often carried unrealistically high starting bids and reserve prices. Many got zero bids.

I think we made a couple mistakes in the middle of last year, Whitman told The Associated Press. We frankly had too many items on the site.

The company is tweaking seller fees to encourage smaller starting bids and discourage sellers from listing huge numbers of similar items. Representatives have been calling individual sellers, reminding them to abide by fair-use policies. And eBay is taking a more active role in combating the growing incidence of fraud, identity theft and privacy invasions.

As a result, Whitman said, the site has a higher quality of items, and the prices are more in sync with their market values. During the quarter, 82.9 million active eBay users exchanged $14.28 billion in goods, ranging from pricey real estate and cars to toys and shoes.

Conversion rates are going back up, so sellers are seeing more success and if history is any guide, supply follows demand, Whitman said. We always anticipated a lag in listings growth. We are not unduly concerned.

Tepid growth in listings didnt worry Rick Munarriz, a senior analyst in media, technology and the Internet for The Motley Fool. He said it was a logical consequence of purging shoddy sellers.

Last year, they were a trailer park, and this year they want to be a luxury condo, Munarriz said. The current users are being milked more, but they keep coming back, so the formula is working.

David M. Garrity, director of research at New York-based Dinosaur Securities LLC, praised the companys strategy to wring more money from users. But he emphasized that eBay one of the few dot-coms to survive the shakeout starting in 2000 needs to attract new users. The Web site should be far more interactive and addictive, lest it become the target of a private-equity takeover, he said.

Being a social networking site for Web 1.0 was wonderful, Garrity said. But it leaves open the question about whether theyll have that position with web 2.0 or, shall we say, Web N.0. 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

NEW YORK—The shot past 13,000 for the first time Wednesday, powered by signs that the U.S. economy and corporate profits are growing at a steady pace.

The stock market’s best-known indicator surged past its latest milestone shortly after the opening of trading, and continued rising to 13,036.99 before retracing some of its steps and hovering below the 13,000 mark.

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The Dow climbed to a new record as many of the country’s biggest companies surpassed analysts’ first-quarter earnings projections. Among those beating forecasts Wednesday: soft drink maker PepsiCo Inc. (), materials manufacturer Corning Inc., consumer products company Colgate-Palmolive Co. () and Dow component Boeing Co. ().

Wall Street got an additional lift from the Commerce Department’s report of durable goods orders last month, which showed a robust gain in business . The data reassured investors that demand for U.S. products remains strong, lending support to the economy. The department also reported that sales of new homes rebounded slightly in March, as the market expected.

The earnings and economic data indicated slow, stable growth ? an ideal situation for investors, who hope the will abstain from raising interest rates to curb inflation.

“The U.S. economy is in pretty good shape,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “We want slow earnings growth. We want slow economic growth. It keeps the Fed on the sidelines.”

It took the Dow just 129 trading days, since Oct. 18, to make the trek from 12,000 to 13,000, far less than the 7 1/2 years that the blue chips took to go from 11,000 to 12,000. But the swiftness of this latest trip does recall the days of the dot-com boom when the major indexes were soaring and it took the Dow a mere 24 days to barrel from 10,000 to 11,000.

In the first hour of trading, the Dow was up 29.90, or 0.23 percent, at 12,983.84. The index typically has retreated after crossing big milestones in the past.

The broader Standard & Poor’s 500 index was up 3.77, or 0.25 percent, at 1,484.18, while the technology-dominated was up 4.00, or 0.16, at 2,528.54.

Bonds slipped on the positive economic data, with the yield on the benchmark 10-year Treasury note rising to 4.64 percent from 4.62 percent late Tuesday.

The Dow was the first of the major indexes to recover from the stock market’s prolonged slump in the early part of the decade. The S&P 500 has yet to reach its closing peak of 1,527.46, reached in March 2000, and no one expects the Nasdaq to reach its record of 5,048.62, also reached in March 2000, anytime soon.

Still, the Dow’s latest achievement did not come without setbacks and volatility ? the index lost 416 points in a single session, on Feb. 27, amid fears that the U.S. economy would fall into recession and that China’s economy would slow as well. And Wall Street has had periodic shudders over signs that inflation might be getting out of hand ? a trend that would lead the Federal Reserve to resume interest rate hikes ? and over data that showed continuing weakness in the housing market.

Just two weeks ago, the Dow fell nearly 90 points after minutes from the last Fed meeting showed the central bank’s level of concern about inflation.

Gold rose, while the dollar approached a record low against the euro.

Crude oil prices rose 64 cents to $65.22 a barrel on the New York Mercantile Exchange, after the Energy Department reported a decline in U.S. gasoline inventories.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 390.1 million shares.

The Russell 2000 index of smaller companies was up 1.00, or 0.12 percent, at 827.36.

Overseas, Japan’s Nikkei stock average fell 1.24 percent. Britain’s FTSE 100 was up 0.58 percent, Germany’s DAX index was up 1.04 percent, and France’s CAC-40 was up 1.30 percent.

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It’s All-Star time, when Alex Rodriguez, Barry Bonds, and the rest of baseball’s elite annually gather to celebrate their status as being the best at what they do. It’s also the time of year when Hollywood rolls out its own big guns, the megabudget films that studios hope will become the blockbusters that lure folks from their air-conditioned homes to lines that snake around their local movie palaces.

And like the big hitters of the baseball diamond, Hollywood has its own sultans of swat, the best of the best at making blockbuster films that bring the crowds running. BusinessWeek.com surveyed the top 50 films, gauged by the online site «www.boxofficemojo.com», that have delivered the largest (inflation-adjusted) U.S. box-office grosses of all time: Tinseltown’s own Murderers’ Row. Though the movie game has produced its share of great hitters—producer David Selznick’s Gone With the Wind is the box-office champion, with a $1.3 billion inflation-adjusted gross—the top 50 list of blockbusters is dominated by filmmaking’s true titans. Indeed, three producer/directors—Steven Spielberg, George Lucas, and Walt Disney—dominate the chart with a collective 17 films, or one-third of the 50 biggest-ticket flicks of all time. The Biggest Slugger: Walt Disney

Like baseball’s trio of home run kings—Hank Aaron, Bonds, and Babe Ruth—these three dominate the cinematic landscape with their prodigious shots. But the true King of Blockbusters? Disney, whose Walt Disney Co. («www.businessweek.com») still thrives. Yup, kindly Walt, the chain-smoking genius who gave America the modern theme park and created some of the most enduring cartoon icons, produced eight of the top 50 blockbusters, grossing an inflation-adjusted $4.26 billion at the U.S. box office. The late filmmaker’s first full-length animated feature, 1937’s Snow White and the Seven Dwarfs, is 10th on Box Office Mojo’s top 50 list ($717.2 million), followed by 101 Dalmatians ($657.4 million), which Disney released 24 years later.

Launching his empire was no easy feat—the younger Walt and his brother Roy were in and out of financial distress for most of the 1930s as they struggled to create what was to become their studio. Walt mortgaged his home to complete Snow White, which took three years and cost around $1.5 million to make. But it went on to become the best-selling film of the year (no small feat, since kids were charged only a dime to get in, compared to 25 cents for adults) and gave the Disney brothers enough money to buy land in Burbank, Calif., and get their studio up and running. That’s where Walt, employing his own all-star team of animators, hit his other home runs on the top 50—No. 20, Fantasia; No. 23, Mary Poppins (a live-action/animation combo); No. 27, The Jungle Book; No. 28, Sleeping Beauty; No. 36, Pinocchio; and No. 45, Bambi. Lucas, Spielberg Clean Up

If Walt Disney wins Hollywood’s home run derby, then Lucas deserves an asterisk next to his name. Like Disney, Lucas created his own films, conjuring up box-office gold from a fertile imagination that first won over theater audiences in 1973, with his semiautobiographical American Graffiti, which grossed an inflation-adjusted $432.4 million at the box office, placing it 41st among Box Office Mojo’s top 50 blockbusters. Of course, Lucas went intergalactic for his superstardom with the original Star Wars trilogy. Each of those movies landed in the top 50, led by the $1.2 billion grossed by his original 1977 flick, second on the all-time list. Like Disney, Lucas also financed his franchise himself, to maintain control over the merchandise and other ancillary property that sprang from his genius. (Twentieth Century Fox distributes the film, for a fee.) The other two films in his original trilogy are also in the top 15—The Empire Strikes Back, at No. 12, with $646 million, and Return of the Jedi, at No. 14, with $618.9 million. His 1999 Star Wars: Episode I—The Phantom Menace came in 19th, at $558.2 million.