Recovery: When the alphabet is not enough
NEW YORK (Reuters) - There are 26 letters in the English alphabet, but that doesn't seem to be enough when it comes to describing the shape of the global economic recovery.
Most investors are praying for "V" -- a quick bounce back -- while fearing "L," which would signal a period of prolonged stagnation.
But there's so much uncertainty at the moment, that even the technology executives most in the know feel uneasy when trying to predict how and when the recovery will occur.
"I don't think too many people are voting for a 'V,'" said Ralph de la Vega, head of AT&T Mobility (T.N), at the Reuters Global Technology Summit in New York this week.
"I think it will be between the 'V' and the 'L,' if you ask me ... I think it will be more gradual, kind of a slanted U."
Steve Schuckenbrock, head of Dell Inc's DELL.O large enterprise business, sounded a similar note and ventured outside the alphabet to find the appropriate analogy.
"It's between a 'U' and a bathtub. It's a wider U than not," he said. "The problem with the U is that the other side of it is too steep. A slanted U? Yes, I think that's realistic."
Although a few executives at the summit this week did point to signs of stabilization, the overall tone was one of caution. Even amid a broad rise in technology shares this year, industry insiders remain wary that whatever gains have been made since the brutal days of last September and October could be fleeting.
Corporate IT spending remains a huge question mark for the second half of the year, executives said. With cost cuts the order of the day, some worry that there are few potential catalysts to reignite growth.
"A bathtub shape? Or an Olympic pool shape?" mused Symantec Corp CEO Enrique Salem.
And what about some other scenarios, such as a "W," in which a recovery would be followed by another hair-raising decline like that of late last year?
Corning Inc (GLW.N) Chief Financial Officer Jim Flaws dismissed that development, although he offered his answer along with a caveat.
"I am not an economist. We actually don't have a corporate economist. Because we used to have one and he had predicted eight out of the last four recessions, so we realized that this probably wasn't -- this is not an easy thing to do, to be an economist."
Even those willing to go out on a limb and pick a letter ended up more or less twisting it into an unrecognizable shape.
Sybase Inc SY.N Chief Executive John Chen predicted a U-shaped recovery, although he warned it could be at least a year before we begin to climb up the far side of the slope.
Salesforce.com (CRM.N) CEO Marc Benioff, after the company's quarterly results, told Reuters: "It kind of looks like a big 'L' where there was precipitous decline and there is now an evening out."
Any talk of recovery only underscored the concern that still exists in the sector. And some wanted no part in any alphabet-related forecasting.
"I can't even think of a letter," said Sanford Bernstein analyst Toni Sacconaghi.
(Reporting by Gabriel Madway; Editing by Tiffany Wu, Phil Berlowitz)
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