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Piercing the gloom: Tech executives' strategies
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From International Herald Tribune March 13
NEW YORK--A slowdown. A downturn. A reset to reality. Even the dreaded "R" word.
Those are terms that some of the most prominent American technology executives are using to describe the current state of the U.S. economy.
In the dim past - say, six months ago - it was big news when a major information-technology company missed its financial targets. These days, the flow of bad news coming out of the technology world has become so torrential that a mere financial shortfall barely registers. Now, the headlines are all about jobs - whether established hardware companies such as Intel Corp., Cisco Systems Inc. and Nortel Networks Corp. are cutting thousands of them or whether Yahoo Inc., one of the few remaining big dot-com companies, has its chief executive resign.
A sign of the breadth and depth of the gloom may be the willingness of some technology executives to openly discuss the economic slowdown and its impact on their industries.
Last week, top executives from Dell Computer Corp., EMC Corp., Intel, Juniper Networks Inc., Motorola Inc. and Sprint Corp. took time to answer three questions:
.Where is the economy right now?
.What should technology companies be doing in light of current economic conditions?
.What is your own company doing in light of those conditions?
The executives were hardly uniform in their assessments. Craig Barrett, Intel's chief executive, and Christopher Galvin, Motorola's chairman and chief executive, both used "recession" to describe the current state of affairs.
But Michael Ruettgers, chairman of EMC, a big maker of computer storage systems, said he thought the economy was mixed. And Scott Kriens, chairman of Juniper Networks, the up-and-coming maker of high-speed Internet routers, said he did not think times were really as bad as they might seem.
James Vanderslice, co-president and co-chief operating officer at Dell, even said that strong companies - among which he included his own - could take advantage of the lean season by gaining market share. "This is our time," he said.
From a high-technology standpoint - telecom equipment and service, software and semiconductors and other high-tech products - the economy is in a recession. And the issue is how will the fact that the high-tech sectors are in a recession impact the overall economy? I think it will impact the overall economy at some juncture in the future quite negatively if it persists.
There is so much change and so much volatility, so much amplitude up and down, that it's difficult for people to predict. Therefore, they're having to go out and say, "I can't predict what my level of sales will be in the future or what my level of profits will be."
The practical things one does are reduce all discretionary spending, modify capital-spending plans, size capacity smaller.
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