Is the Tech Downturn Over?
High tech, along with the auto and home construction industries, has seen a significant impact from the economic downturn. PC orders plummeted, software sales tanked, and networks stopped expanding. It was sort of like 2001-02 all over again, with companies taking a serious breather from major capital expenditures. Lots of companies laid off staff, retooled in different directions, and generally kept their heads down.
Now, however, some light is appearing at the end of the tunnel. Stocks are rising slowly, some folks are spending money again, and various companies are reporting gains in sales. In a fairly major piece of news, Cisco Systems is seeing a rise in network gear sales for the first time in over a year. Cisco is one of the biggest players in networking, supplying routers and other gear to huge corporations and ISPs. Having them report an uptick in the market is very good news indeed.
The company’s CEO said that “it will start to hire more employees after laying off workers over the past year. Cisco’s work force has shrunk by about 3,500 over the past four quarters to about 63,800, mostly from layoffs but also from early retirement offers and attrition.” Now, some belt tightening was expected but 3500 out of 64000 is just under 5% of their total work force. That’s still a lot of people who lost jobs.
On the other side of the coin, Intel’s rosy forecasts may not be entirely honest. Some are suggesting the chip market itself could be in a “long, drawn out recovery” period. It’s entirely possible certain segments of the market will rebound before others. I suspect corporate networks will start expanding, for example, before everyone starts queuing up to buy new PCs. The former represents critical infrastructure, while the latter have become commodities. And PCs are easier to upgrade or refurbish.
Of course, the current uptick in the markets and job outlook may not last. We could easily have several false starts before the downturn is truly over, but at least the steady stream of bad news has largely ceased.