By Georgina Prodhan and Jim Finkle
FRANKFURT/BOSTON (Reuters) - Technology and media companies have weathered the global credit crunch but a wider U.S. economic slowdown poses a deeper test of their resilience.
After a round of first-quarter earnings reports, investors in companies such as IBM (IBM.N: Quote, Profile, Research, Stock Buzz), Intel (INTC.O: Quote, Profile, Research, Stock Buzz) and Google (GOOG.O: Quote, Profile, Research, Stock Buzz) heaved a sigh of relief, but the sector may have little time to regroup before facing its next major challenge.
The credit crunch has done most damage in the financial sector -- certainly an important customer group for suppliers of hardware, software and communications, but also a sector that cannot afford to fall behind in efficiency-boosting technology.
A slowdown in consumer spending, however, will ripple more broadly through the economy, and leaders of top technology, media and telecoms companies -- including a clutch attending the Reuters global TMT Summit next week -- have yet to convince that they will escape its effects.
Steve Rubinow, CIO at stock markets operator NYSE Euronext (NYX.N: Quote, Profile, Research, Stock Buzz), said he was scrutinizing IT spending harder than usual and that smaller vendors would likely suffer most -- an opinion also expressed by several industry observers.
"We're trying to keep a lid on it," he said.
"We're going to get a lot of leverage by reducing the number of vendors we deal with," he added. "We have the Oracles (ORCL.O: Quote, Profile, Research, Stock Buzz), the HPs (HPQ.N: Quote, Profile, Research, Stock Buzz) and the IBMs (IBM.N: Quote, Profile, Research, Stock Buzz) of the world having a significant presence in what we do."
Trip Chowdhry, an analyst with Global Equities Research, says ultimately no tech company will escape unscathed. Continued...
© Thomson Reuters 2008. All rights reserved.
| Japan Investment | Jul 01 - 2, 2008 | Country Summits |
| Global Real Estate | Jun 23 - 25, 2008 | Real Estate |
| Consumer and Retail | Jun 16 - 18, 2008 | Consumer Retail |
| Investment Outlook | Jun 09 - 12, 2008 | Financial Services / Exchanges |
| Global Energy | Jun 01 - 5, 2008 | Energy |
