<nettime> Downbeat Mood at Tech Conference

[Ana Viseu <ana.viseu {AT} utoronto.ca>]

[This is an interesting article on a tech. business conference somewhere in 
the US,  that reflects well the mood of the new economy business. Besides 
the obvious, the market is going down and tech. business are not doing as 
they expected, it is interesting to look at the statements by the many of 
the CEOs and see patterns in their understanding of this phenomenon. These 
go from the recognition that perhaps the new-economy follows the same old 
cycles, to the 'saving my ass' attitude (my company is different from my 
competitor's one), to the creation of new theories to explain this 
phenomenon, such as the "the cockroach theory", i.e., "where there is one, 
there is going to be a whole lot of them.'' Best. Ana]



Downbeat Mood at Tech Conference


SCOTTSDALE, Ariz., Dec. 2 - Michael Dell just came out and said it.

``There haven't been a lot of great reasons to buy a new computer,'' Mr. 
Dell, the chairman of the Dell Computer Corporation told a group of 
investors here this week.

Jeffrey Weitzen, president and chief executive of one of Dell's rivals, 
Gateway, put it another way, the day after his company shocked the market 
with news that sales and profits would fall far below forecasts.

``Do you really need a gigahertz processor?'' Mr. Weitzen said during an 
interview here. ``We're finding people don't need that. The drive for speed 
is no longer what it once was.''

Neither is the drive for online retailing, said Shelby Bonnie, chief 
executive of the technology news service, CNet Network. "People have way 
oversold the e-tailing space."

The doomsday declarations were uttered at the annual technology conference 
sponsored by the investment bank Credit Suisse First Boston, which seemed 
to be ground zero this week for the implosion of investor confidence in the 
information technology sector.

The conference's organizer, Elliott Rogers, managing director and head of 
the company's technology research group, said as much: "Suspicions of 
problems have been confirmed. It's like getting hit by a 2 by 4."

The conference, a weeklong open-microphone session for chief executives of 
technology companies, coincided with a particularly heavy pummeling of the 
technology-heavy Nasdaq composite index, which fell nearly 9 percent this 
week. And the 2,000 or so investors here seemed to divide their attention 
between the Nasdaq and the 200 technology chiefs who found themselves here 
not to praise their companies but mainly to explain themselves.

The message from many was consistent, if it sounds a bit desperate at 
times: The drop in their stock prices was simply part of a correction - an 
over-correction, they insisted, and not a reflection of the fundamentals of 
their businesses.

And yet, there was no getting around the evidence that the stock-market 
correction coincided with an actual slowdown in some key segments of the 
technology industry.

It is not news that the dot-com industry is in the dumps. But now, so is 
the semiconductor business. ``You've got Intel and AMD on a suicide mission 
to make the fastest chip,'' Mr. Rogers said. AMD, or Advanced Micro 
Devices, is Intel's main competitor.

Fast chips, for now, anyway, may be beside the point. Computer makers are 
now saying their main source of revenue will be accessories, not the 
computers themselves. They are recasting their business plan along the 
lines of the time-honored practice of giving away the razor and profiting 
from the sale of blades. Gateway, for example, is hoping to grow by 
emphasizing a broad range of training packages and services for PC's, as 
well as electronic devices that can be linked to the Internet or networked 
in a home.

But the troubled industries go beyond makers of PC's and PC chips. The 
Internet consulting services industry is gasping for air - notably 
MarchFirst, which this week forecast a fourth-quarter loss of perhaps 30 
cents a share, instead of the seven cents a share profit analysts had 
expected. The software companies are not exactly booming. And various 
hardware companies are trying to figure out what a slowdown in the 
telecommunications industry will mean to them.

Each in their own way, the industry chiefs seemed to be asking the same 
questions: Is my rivals' problem going to become mine? Am I really in a 
cyclical business? Is the new economy subject to the same ebbs and flows as 
the old economy?

Thomas Galvin, a Credit Suisse analyst, described the technology troubles 
as "the cockroach theory - where there is one, there is going to be a whole 
lot of them.''

That may explain why chief executives at the conference tried to put as 
much distance as possible between their companies and their ailing 
competitors. For instance, Compaq Computer's chief, Michael Capellas, had 
this message for the audience: "So for all those people who ask, `How was 
your Thanksgiving?' It was just fine, thank you.'' He was alluding to the 
announcement last week that Gateway's PC sales over the Thanksgiving 
weekend were down 30 percent from last year.

Lawrence J. Ellison, the outspoken chairman of the software company Oracle, 
took pains to praise his company's offerings for the e-commerce industry, 
primarily on grounds that they were so different from anything produced by 
his rivals. ``It's unimaginable to me that we got this one wrong,'' Mr. 
Ellison said.

Steve Case, chairman and chief executive of America Online, told a packed 
room that investors had wildly overreacted to negative market news 
recently, battering his stock way lower than it deserved. ``There are 
companies, including AOL, that now are screaming buys,'' he insisted.

John Connors, of Microsoft, sounded as much like a salesman as what he 
actually is - the company's chief financial officer. ``There is no better 
place to invest now than in the technology industry,'' Mr. Connors said. 
``Is there a cliff? Only if consumers decided they didn't want to buy our 
products anymore.''

And Jeff Dachis, chief executive of the Internet consulting and World Wide 
Web-development company, Razorfish, sought to distance his company from 
others in the struggling Internet services business. ``We're not part of 
that circus,'' he asserted.

``We're a real live company with profits. Don't lump us into the gloom and 
doom.''

Despite that gloom and doom, Credit Suisse First Boston did call the bottom 
on several technology stocks and rate them strong buys, including 
DigitalThink, which offers corporate training courses over the Internet. 
The stock that Credit Suisse was pushing hardest was the chip maker 
Fairchild Semiconductor International, despite an acknowledgment by 
Fairchild's own chief financial officer, Joseph Martin, that a ``cloud'' 
hung over the entire sector.

And how might investors start picking the good apples among the bad? It 
will not be easy, but analysts say that companies that serve a particular 
market with the most sophisticated products for which there are few 
alternatives are the companies that tend to do the best if the market turns 
bad. There may not be a big demand to upgrade most commonplace computers, 
the reasoning goes, but there will always be a demand for the fastest 
systems among the customers that actually do need additional speed and 
processing power.

The same goes for hardware in other companies. Even as telecommunication 
companies face debt problems and ponder cutting their capital spending, for 
example, there are still some products - like the optical networking gear 
made by companies like Cisco and Juniper - that they feel simply they must 
have.

And as for those dot-coms - at least the survivors? It may get worse before 
it gets better, but Mr. Bonnie of CNet insisted that it will eventually get 
better. ``I'm sure the Wal-Marts took some time to get the kinks out,'' he 
said.

Mr. Rogers, the conference organizer, said technology investors of all 
stripes will simply have to accept certain economic realities.

``There is a shortfall in demand, if not a serious growth deceleration,'' 
he said. ``It's not just in computers. It's in everything. I've been 
through this many times before. It's called a cycle.''

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http://www.nytimes.com/2000/12/04/technology/04NECO.html
By Andrew Ross Sorkin; NYTimes; December 4, 2000



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