Comments on: The tech downturn: How long and how bad?

We interviewed more than 20 executives, venture capitalists, and bankers to see what they think. While there's little consensus, one thing's for sure: they're plenty worried.

[Albertv]

This economy in the past 6 years and beyond was driven by consumers with the aid of the Housing Bubble. Any comeback would have, has to include a consumer with access to a wealth generating scheme in the form of productivity. I seriously doubt the world outside the US is going to continue to finance our apatite for spending in the light that we as Americans let others do our manufacturing for us. Uncle Sam will go bust saving the Banks. A recovery would entail a massive reduction in the price of services. funny, the cost of internet access and speed is 'much' lower and the speed is much higher in the EU. I know because, my core family lives there. It is time for American companies to compete on a world cost structure at home as well.

[Lerianis]

Quite true. I am shocked that so many companies are charging less over in Britain than they do here... you would think that it would be the opposite, but I guess they got addicted to soaking the American customers so badly that they can't even think of doing that.

[Kwasiowusu]

"Any comeback would have, has to include a consumer with access to a wealth generating scheme in the form of productivity"

Umt.......the US economy has had some of its best productivity growth ever in the last 10 years.

[globalist_agenda]

10 Year Fake Economy. Zero Real Growth In DOW. What you are seeing today is the result of a 10 year fake economy finally collapsing. The people who lied and told you everything was fine, their waterboy talk radio spin boys who crowed about a booming market. Well, the market was based on speculation not reality. Albertv is correct, you can't have a solid economy solely based on consumer credit. You can't have an economy built on service industries that consist of health care spending and government jobs (largest single employer). You can't have an economy based on massive government debt spending. There's no quick fix for this economy, and unless our leaders decide to become honest and forthright there is no end in site.

Ten year DOW performance? 5.45%. Adjust for real inflation rate and it's negative growth.
http://www.djindexes.com/mdsidx/index.cfm?event=showavgstats

[Willie Winkie]

As I see it, hardware companies will be most at risk in this downturn. They all have HUGE inventories to work off. Many will start missing earnings during the 4th quarter. Crappy holiday sales mean heavier discounting in Q1 of 09'. That sets the stage for even worse earnings. Additionally, tech inventory starts losing value the longer it sits in the warehouse. That means even worse earnings in the 2nd and 3rd quarters of 09. All of this bad news will prompt a ton of layoffs at tech companies. This will further reduce demand and the whole process starts looking like an insatiable black hole. Even high fliers like Apple and Nokia and HP will see their shares punished on a scale that would have been unthinkable a year ago. Software companies should fare a bit better, but won't be immune (after all, most software runs on some kind of hardware). So for tech, it looks like (2000/2001) deja' vu' all over again.

[Lerianis]

I think you are overstating the case by a lot. The fact is that computers are at a very good price point right now, and are one of the things that people are NOT putting off buying.

[Lerianis]

I'll be honest: I thought that tech companies were going to weather this climate absolutely no problem whatsoever. Why? Because they have an awesome price to performance ratio right now, better than any other time in the history of computers.

[Kwasiowusu]

What tech downturn?
IBM results just beat estimates in their quarterly results yesterday with very solid results with good profits and revenue growth figures, and re-iterated full year results.
China's economy is till growing at full speed at over 9% GDP growth. PC sales in China keep hitting new records every year.
Companies like IBM, HP, Microsoft etc which get a big chunk of their revenues from China, India,The Middle East etc,should be able to do quite well whether the panicky gamblers on Wall Street have a cow or not.
When Microsoft reports their results in a couple of week time, they should still come in with plenty of profits, more or less in line with expectations.
Apple, which sells very few PC's in the huge new markets of China and India, and is disporportionately dependent on the US market, may not do so good.
Meanwhile, everyone should calm down, go to work as usual, and wait for the markets to settle down, as they will soner rather than later. Markets should be up next week, after this week's big falls.

[knowles2]

It depends, as with any bust their is winners and losers in every industry.

Companies who focus their primary growth in eastern and middle east companies will more continue growing as these economies do not have large consumer debts and still rapidly expanding economies.

Companies like google which still mainly base in the western economies will suffer worst.

[likeAppnforPhys]

I know experts who aren't scared to predict. They're telling people to get their homeowners associations to allow subsistence gardens, and tenants should form tenants' unions to negotiate around mass vacancies of multi-unit buildings--seriously.