(For other news from the Reuters Media and Technology Summit,
* Euro zone crisis, U.S. unemployment has execs cautious
* Olympics, U.S. Presidential election to provide boost to
By Nicola Leske
NEW YORK, June 15 A deepening euro zone crisis,
tepid U.S. job creation and slowing growth in China have
prompted some media and technology companies to sound a stronger
note of caution for the rest of the year, executives in those
industries said at the Reuters Global Media and Technology
Summit this week.
Companies fear the sovereign debt crisis and slowing
economies of European nations will drag down the U.S. economy,
the executives said. Tensions are running particularly high
ahead of Sunday's pivotal election in Greece -- whose outcome
could cause the euro zone economy to deteriorate.
"Clearly we are concerned about the trajectory of where we
are heading," said Tom Georgens, chief executive officer of data
storage company NetApp Inc, referring to worries about
the debt situation in the south of Europe starting to spread to
Germany, Britain and France.
Xerox Corp CEO Ursula Burns said her company had
been feeling the effects of the soft European economy since the
end of 2011 and that its financial planning for this year
factored in the possibility of that continuing.
"I am not expecting it to be a horror story, but I am not
expecting it to be great either," said Burns. Xerox also manages
unemployment benefits for some U.S. states and therefore
actually sees upside from an economic downturn domestically.
Forrester analyst Andrew Bartels said last week that "the
risk of a tech downturn that follows a deeper recession in
Europe and slower growth in the U.S. and Asia Pacific have now
risen to around 30 percent."
In the United States, the unemployment rate edged up 0.1
percentage point to 8.2 percent in May.
JPMorgan analysts last week cut their information technology
spending growth outlook for 2012 to 2.2 percent from 3.8 percent
due to macroeconomic conditions. "This change is a
disappointment after we had raised the growth outlook on March
13," they said.
For tech investors wondering where to put their money,
security and software companies are likely to be better bets
than IT hardware companies, both Forrester and JP Morgan said.
Although its sales growth has been slowing, software often
allows upgrades without expensive hardware purchases and
automation, which helps cut down on costs and improve
Some categories such as cloud computing, software as a
service or corporate security will probably outperform, JPMorgan
said, adding that Oracle Corp, CA Inc and
Symantec Corp were best positioned.
Forrester's Bartels called software the one bright spot and
said companies such as Oracle, SAP AG and
Salesforce.com Inc were "looking fairly good."
OLYMPICS AND ELECTIONS
The London Olympics and the U.S. presidential election will
boost advertising in the second of half of 2012 despite the
downturn, the CEOs of advertising agencies WPP and
Publicis' Maurice Levy said the automobile and
pharmaceutical companies were "suffering," and banks were slow
to spend. But he added that advertising of consumer goods and
technology was holding up well, and battles between the likes of
Google Inc, Apple Inc and Samsung
are likely to drive up spending from the telecom sector.
The London Olympics this summer have prompted major
advertisers like Coca-Cola Co, Procter & Gamble Co
and McDonalds Corp to spend heavily to promote their
brands to the large worldwide audience the games are expected to
However, Levy and WPP CEO Martin Sorrell presented differing
views of 2013.
Sorrell was the more downbeat of the pair, saying 2013 could
prove difficult because of an increasingly large U.S. deficit
and a lack of major events such as the Olympics.
But Levy was cautiously optimistic. Based on clients'
planning, "I see 2013, for the time being, quite positively," he
For print media, perhaps the only bright spot is the
uncertainty that comes with economic troubles, which tends to
drive up circulation, particularly for business-oriented
publications like the Financial Times.
"The worse the news gets, the more subscriptions we sell,"
FT.com Managing Director Rob Grimshaw said, adding he would
still prefer to be "trading in conditions that were more
Follow Reuters Summits on Twitter @Reuters_Summits
(Additional Reporting By Leila Abboud, Gwenaelle Barzic and
Kate Holton in Paris; Paul Sandle in London; and Sinead Carew,
Jim Finkle and Jennifer Saba in New York; Editing by Peter
Lauria and Lisa Von Ahn)