* Technology, media, telecoms executives surprisingly
* Spending still strong in Germany
By Georgina Prodhan and Kate Holton
BARCELONA, Spain, Nov 18 Few companies are
making plans for a break-up of the euro zone or a deeper debt
crisis and many believe they could yet escape unscathed if
executive views at an investor conference this week are any
Instead, most companies are responding to the prolonged
economic uncertainty in the euro zone and the United States by
turning inwards and focusing on things they can control. A few
appeared to be in outright denial of a crisis.
The mood at Morgan Stanley's annual technology, media and
telecoms conference in the Spanish city of Barcelona, was
surprisingly upbeat, with many of the speakers comparing the
current situation favourably to the Lehman crisis of 2008.
"At the end of 2008 and the beginning of 2009 we had a
cliff, and suddenly we had clients cutting 15, 20 percent. What
we have currently is not so dramatic," said Maurice Levy, chief
executive of ad agency Publicis.
Most of the hundred or so company executives focused on
bright spots in their industry, such as a cyclical upturn
expected in the semiconductor industry, while
others looked to cut more costs.
Their apparent lack of concern may be a factor of the
sectors they are in, where structural turbulence is the
principal worry. The Internet continues to threaten traditional
media, perpetual technology advances rapidly commoditise new
gadgets and equipment, and incumbent Western telecoms carriers
are grappling with stagnant domestic markets.
But Martin Sorrell, CEO of the world's biggest advertising
group WPP, put it down partly to a kind of fatigue with
"I think people who run businesses have just sort of lost
patience really," he told Reuters on the sidelines of the
"You can't wait for the problems to be solved because you
have a business to run. So you try and do the best you can in an
In Europe, politicians and the European Central Bank are
each urging each other to act faster to tackle an escalating
debt crisis that began with Greece but now risks engulfing
Italy, Spain and even France.
The crisis is threatening to derail a burgeoning economic
recovery in the United States, where a so-called "super
committee" is trying to reach a deficit-cutting deal to avert
automatic countrywide public spending cuts. ID:nN1E7AG0PZ]
"Is there going to be a new government in every European
country? What is it going to do? Is there going to be austerity?
Who knows?" asked John Wren, CEO of U.S. advertising agency
"If the governments are not very bright and start sending
messages out that, yes, we have serious problems and, yes, we
will all solve them together, who knows what happens. But the
things we can control, the things that our clients can control,
we're pretty confident about that."
Omnicom reported a 13 percent rise in third-quarter sales
last month. But when asked about the outlook for
2012, Wren said: "We fully expect that growth will be there, but
I can't really give you a solid projection."
Sorrell said the uncertainty would likely benefit
advertising agencies in the short term, as companies put some of
their cash piles accumulated in the new spirit of conservatism
since the Lehman crash to work.
"When you're faced with these uncertainties, you don't want
to take a risk, particularly post-Lehman. Boards... are
terrified of making mistakes," he said. "So you don't invest in
capacity but you do invest in brand."
Sorrell forecast that WPP's organic sales growth would slow
but not crash -- to 4 percent next year from an expected 5
percent this year.
Telecoms operators are already being hit by cuts in consumer
spending, especially in southern Europe where many have
introduced new, cheaper tariffs.
As fears grow that the crisis will seep into the core of the
euro zone, France Telecom's Deputy CEO Gervais
Pellissier told Reuters his company was not affected yet but he
"Who would not worry? he asked. "This is not a bank crisis,
it is a sovereign debt crisis that can be solved only by more
tax or more inflation or less spending. All of those three
factors will have an impact."
Operators in mature, western markets have, however, already
been expanding into faster-growth economies for some time as
growth has slowed at home.
Nordic carriers Telenor and TeliaSonera
have been among the most aggressive, and are also shielded by
being outside the euro zone, although much of their trade
depends on it.
Telenor's chief financial officer said his company's Swedish
business could be affected by the crisis,
although Swedish operator TeliaSonera's finance chief said there
was little evidence of impact there so far.
"In Sweden, when you look around the area where we are
situated with our office in the centre of Stockholm it is very
very difficult to even get a table for lunch," he said.
In Germany, whose economy is still growing and which has yet
to feel the impact of weakness in its export markets, spending
is still strong, said Axel Springer, publisher of
Europe's best-selling tabloid, Bild.
"I'm still optimistic for the economy because... everybody
talks about the crisis but in the real industry it has not yet
arrived and there is no reason why it should arrive," said CFO
"Perhaps in springtime everybody will say: 'Where is the
crisis?' The same as people say now in Germany," he said. "If
you look at the car industry, the major industries in Germany,
they are all doing extremely well, still."
Carmaker Daimler, however, last week became the
first major German exporter to cast doubt on the wisdom of
keeping Greece in the euro zone, in a signal that Germany's
feeling of immunity may be waning.
Logitech, the world's biggest maker of computer
mice, called for politicians to do more, but suggested that for
now weaker consumer spending was limited to big-ticket items.
"As a citizen, I am increasingly worried about the economy.
I am praying European politicians can do something about the
euro. German politicians could do a better job explaining this
to their citizens," he said.
"As CEO of Logitech, I am less concerned. Our price points
are less impacted. Our products are sold below