Industry Update: Technology

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7/30/2009

According to Reuters, technology companies are seeing signs of improvement in their industry in recent months, resulting in higher share prices. Since early March, Asian stocks have risen 45 percent and factories are increasing production to accommodate anticipated renewed consumer interest in tech-focused goods. Industry leaders are cautiously optimistic. Leo Apotheker, co-chief executive of business software maker SAP (SAPG.DE: Quote, Profile, Research, Stock Buzz), said the next few months may bring "glimmers of hope" for the global economy and "we're probably starting to see a stabilization."

For the technology sector, the second half of the year is seasonally stronger than the first. "According to Robert Half Technology's third quarter IT Hiring Index and Skills report, 77 percent of technology executives in the Pacific region - which is comprised of Alaska, California, Hawaii, Washington and Oregon - expect to add employees." The next test of consumer demand will come in August and September, the back-to-school season in North America and Europe. For a list of recent tech sector layoffs, visit http://news.cnet.com/tech-layoffs/?tag=mncol.

Reasons for Improvements:

  • Government stimulus packages, particularly in China, may entice consumers to start spending again. Hopefully this will lead to a real recovery in demand after inventory restocking is done over the next months.
  • According to Channel Insider, many IT vendors and their solution provider channel partners are expecting a boost from the economic stimulus package with funds from the American Reinvestment Recovery Act in 2010 and 2011. The healthcare vertical market alone is due to receive $20 billion in funds for projects such as electronic medical records and telemedicine. In a June 2009 news article titled, Silicon Valley Lay Offs Slow As Companies Restart Projects, David Knapp, RVP of Robert Half Technology in Northern California, writes that he sees the most activity in healthcare and financial services. He states this is due to healthcare patient records going digital and the new focus on Risk Managers and Business Analysts.

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