Technology leaders say economic slowdown not short-term
Survey reveals tech execs say they have been adversely affected by the economic slowdown, and believe the economic crisis as not a short-term phenomenon.
The DLA Piper Technology Leaders Forecast survey results released October 20 revealed while industry leaders indicated optimism about future opportunities, majority say they have been adversely affected by the economic slowdown.
DLA Piper is an international law firm that does venture capital and intellectual property work in the technology sector.
The survey revealed that technology leaders have a host of concerns that include a late economic rebound, with approximately 90% of C-level technology executives-respondents not believing the IPO market will return until at least the end of 2009. Responses were received between September 23 and October 6, amidst the debate in Congress on the $700 billion bailout bill and during a tumultuous two weeks on Wall Street.
This is not surprising, according to Peter Astiz, Global Co-Head of the DLA Piper Technology Sector Practice, “given the extent of the current economic crisis and the shutdown in the IPO market that occurred following the Tech Bubble Burst in 2000.”
The survey, measuring the attitudes and perspectives of top executives within the technology industry, also revealed that 75% of respondents say they have been adversely affected by the economic slowdown. Only 15% of respondents think the U.S. economy is likely to rebound in the first half of 2009 and more than half of respondents (55%) believe the IPO market will not begin to rebound until at least 2010.
“On an operating level, we asked technology executives how they expected the economic crisis would impact their business. Almost two-thirds of respondents said they expect their revenues to decline because of the economic crisis. However, in a clear sign of optimism over their medium and long term prospects, only a quarter of respondents indicated they are reducing their sales and marketing expenses, and even a smaller percentage of executives were planning on cutting their research and development expenses. This seems to indicate a belief that the impact on the technology sector will be more short term in nature and that companies plan to continue to strategically invest in their businesses,” Astiz added.
More than half of technology company entrepreneurs asked disagree with more than half of finance and venture capitalist respondents saying the current financial crisis will have a more adverse impact on the technology industry than the Technology Bubble Burst of 2000.
“We think the difference between the two groups was largely due to the emphasis of Venture Capitalists on exit issues such as M&A;and IPOs - which are likely to be more adversely impacted in the near term - than longer term operating results,” Astiz noted.
The survey yielded a number of other interesting conclusions, including:
Clean technology is one of the bright areas amid the financial crisis and economic turmoil, with tech leaders believing the sector will get a boost given the continuing economic and political pressure towards greater U.S. energy independence.
Almost half of all respondents (48%) do not have an open source software policy, which experts warn could open them up to legal exposure.
While there continues to be considerable discussion about innovation coming out of emerging markets, 55% of respondents think the U.S. will still lead in producing the next generation of “leap-frog” technologies in the coming decade.
Survey respondents likewise gave some interesting perspectives when asked to share the greatest opportunities in today’s technology industry. Most of them see green technology and clean technology as the segments most primed for growth.
