Mon, Mar 30, 2009 - Page 12 News List

No ‘green shoots’ for telecom, IT industries: EIU

By Kevin Chen  /  STAFF REPORTER

The Economist Intelligence Unit (EIU) said there were no “green shoots” of recovery for the world’s telecommunications and information technology (IT) companies because one of its recent tech surveys showed a growing sentiment that the current recession would be long-lasting.

“The green shoots of economic recovery are virtually nowhere to be seen,” EIU said in its biannual Tech Sector Barometer survey released on Friday.

The EIU is part of a UK-based company that publishes the Economist magazine.

In the survey, about 46 percent of the 367 tech companies polled said they expected market demand to deteriorate from its current low over the next six months, while only 20 percent said demand would rise.

In addition, 66 percent of the polled companies said their financial health would worsen in the next six months, compared with fewer than 10 percent that expected an improvement in finances.

Meanwhile, nearly 44 percent said they would either maintain or slow down their investments in research and development activities to cope with the current recession, with just 20 percent expecting the opposite.

The EIU’s survey came amid a mixed market discussions about whether the “green shoots” of recovery have arrived after governments around the world introduced various stimulus packages to revive consumer spending.

The EIU said its survey showed that software and telecommunications companies would be faring better than those in the hardware sector during the recession.

It said this was because companies still needed to invest in software to maintain their business operations and consumers needed software upgrades to continue communications, even though they would opt to cut expenditures on non-essential replacement equipment.

Carla Rapoport, EIU director of industry briefing and forecasts, said in a statement that there were some positive signs in the tech sector: low debt among the big players, growing demand in emerging markets and no major concern of overcapacity problems.

But, “the industry clearly sees little chance of an early recovery,” Rapoport said.

Also See: Analysts grasp at possible 'green shoots'of recovery

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