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New Gadgets“This economy” is now a euphemism for the “terrible mess we’re in.” It’s hard to go through a normal business conversation without someone spitting out “this economy” as if it’s a four-letter word. Market gurus can’t agree when it will be over. But whatever the case, some indicators suggest that the technology sector will rally faster than the rest of the economy.
False Perceptions
One can pile argument upon argument as to why the tech sector will not rally soon. Consider the layoffs. Nearly every large technology company performed rounds of layoffs. Why? The answer is grim, but true. Recessions provide a great opportunity for top-grading staff. Although lots of good people were relieved of their jobs, it was part of a cyclical pattern of cutting costs. Consider also the dismal slump in tech sales. This too, has a viable explanation. Tech sales are directly linked to consumer spending. Consumers stopped spending because they were scared. It happens during every economic hiccup. But the sales slump is not a forever slump. It is merely a readjustment-a necessary pause, as in a piece of beautiful music. So, while tech companies cut costs and moaned, there were viable reasons behind the cost-cutting that didn’t signal the demise of the industry.
Behind the Scenes
Ten years ago, the technology sector learned a valuable lesson during the dotcom fiasco. Like good history students, not doomed to repeat the mistakes of the past, the labile tech industry saw the light change to red, and put on the brakes. Thankfully, nobody could point fingers at them for causing the crash. This time, it was the fault of the real estate and banking industry.
Bad news sells. The recession is a great excuse for a national pity party. What hasn’t made the front pages of the Wall Street Journal and USA Today is often the good news. What’s the good news for tech? Business Week observes that major players like Cisco and Microsoft sit atop on massive war chests, some to the tune of over $20 billion. Microsoft is hiring again, albeit strategically and selectively. The Nasdaq, a good barometer of tech stocks, has demonstrated considerable ups. And even those slumping sales are beginning to see an upswing, thanks to the unveiling of tantalizing technology.
So, while the storm is not over, at least the tech sector has a sturdy umbrella with which to weather it.
