Credit crunch "won't be as bad as dotcom crash" for IT

 

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Posted on 20 Oct 2008 at 08:24

Despite turmoil in global markets, two-thirds of senior technology industry executives say the economic slowdown will not hurt them as badly as the bursting of the tech bubble in 2000.

However, more than three quarters of respondents to a new survey say their business has been impacted by the financial crisis, according to the study by the law firm DLA Piper.

Still, only 27% said they were cutting sales and marketing expenditures, and only 15% said they were reducing planned R&D spending.

"That suggests that most of the companies are focused on the fact that this crisis would not have a big impact on them or that they wanted to continue to make investments through this cycle," says Peter Astiz, global co-head of the technology sector practice at DLA Piper.

Slightly more than half of the respondents think the economy will begin to rebound in the second half of 2009, while nearly a third think it won't happen until 2010 or later.

However, a majority agree that the market for initial public offerings - often seen as a sign of true health in the technology industry - is not likely to rebound until at least 2010.

Separately, a study found that overall venture capital investment in the third quarter dipped 1% from the previous quarter to $7.37 billion (£4.2 billion), according to data compiled by Dow Jones VentureSource. That figure is 7% lower than a year ago.

Investment in IT companies fell 10% from the second quarter to $2.73 billion.

A bright spot came in renewable energy, which saw investment surge 71% from the second quarter to a record $1.08 billion.

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Author: Reuters