IT execs say learned the lessons of dot.com crash
BARCELONA (Reuters) - Technology executives told a conference this week they learned lessons in the dot.com crash that wiped $5 trillion off tech stocks at the start of the century that would help them through current difficulties.
Queuing up to make investment cases for their companies, executives said the experience had left them in better shape to survive a coming recession than other sectors that had not suffered in a similar way.
"We had a telecoms crisis in 2001, and I think a couple of learnings that we had at Ericsson (ERICb.ST) are important and valid to keep in mind," Chief Financial Officer Hans Vestberg told Morgan Stanley's Technology, Media and Telecoms conference.
"Focus on cost, regardless of what's happening ... That we learned from 2001, and we keep that in our minds," he said. "You saw that in the last 12 months we have been very focused on cash generation ... That, we will continue."
The themes of generating cash, cutting costs, diversifying customer bases and increasing the proportion of recurring revenues were echoed by companies in businesses ranging from software to telecoms to IT services.
Leo Apotheker, co-chief executive of business software giant SAP (SAPG.DE) pointed to the company's 40 percent of sales that come from steady sources such as maintenance and services today -- double the proportion it had in 1998.
SAP finally showed the scars of global economic pressure in the third quarter, warning last week that sales had fallen off dramatically in the last two weeks of September.
UK-based Autonomy (AUTN.L), whose software helps companies comply with financial regulations, also raised its recurring revenues to 50 percent of sales from 25 percent in 2002.
But by the time Ericsson's presentation came on day two, some investors had heard enough of the same old story.
"Most companies looking to the next 12-18 months are going to be focused on costs, and they're going to be focused on cash," said one.
"So are there any specific other examples you would give about your lessons from last time that would make you much better positioned?"
STARK CONTRAST
Autonomy, whose meaning-based search software helps companies mine documents sometimes stored in multiple formats and thousands of different depositories, said it was positively profiting from the global economic crisis.
"Financial services turmoil is very good for us. Financial services customers are having to buy a lot of software to become compliant," Chief Executive Mike Lynch said. "We're not seeing the kind of effects that SAP reported in the quarter."
Among telecoms companies, both smaller players like Sweden's Tele2 (TEL2b.ST) and giants like Telefonica (TEF.MC) said they would emerge winners. Continued...
