AOL Time Warner's co-chief operating officer, Robert Pittman, seemed unconvinced that business would turn around anytime soon. Further,. though he things the bottom has likely been reached, dark days are here to say for at least several quarters
"It's not getting worse, but I don't see it getting better," Pittman said to an unusually thinly populated room of investors here at Credit Suisse First Boston's annual technology conference. "It's very difficult for anyone to predict."
For technology executives, calling the bottom of the economic cycle for all things digital has become a risky sport. The dozens of top technology executives gathered here for the weeklong open-microphone session to reassure investors about next year's outlook were only mildly reassuring. Instead, the executives veered toward a realistic, often conservative outlook, a departure for an industry once known for exuberant projections.
"None of us has any visibility right now," said David Peterschmidt, chief executive of the network infrastructure software company Inktomi. "Until we see some buying patterns change, all the analyst estimates will be pretty flat."
The difference between this year's conference and last year's was plainly clear. Last year, while technology companies were reporting steep drops in sales almost daily, executives and investors would walk around in a funk, their eyes fixed on the free-falling stock ticker. Still, executives then held out hope that things could return to normal -- normal being the double-digit growth that technology companies were accustomed to.
This year, the reality has set in that normal may not return for a while. "What you had last year was a bunch of rookies entering the ring and in the corner was Joe Frasier," said Elliott Rogers, global head of First Boston's technology research group. "Now they understand what they're up against."
Several executives offered positive, though tempered projections. Texas Instruments' chief executive, Tom Engibous, predicted the bottom had already been reached for his company. "We now believe that the third quarter was the low point for orders and the fourth quarter will set the floor for revenues," he said.
The chairman of Dell Computer, Michael Dell, who said last year that he could not think of a reason to buy a computer, now said there might be reason.
"We don't know when these replacements will occur, but you can't push them out forever," Dell told investors.
The oft-quoted company chairman also noted that an estimated 30 percent of desktop computers and 25 percent of notebooks are at least three years old and, therefore, prime candidates for replacement.
Indeed, many executives and investors say that hardware makers are poised to rebound because corporate clients and consumers may begin a "replacement cycle" -- shedding outdated computers and other technologies for newer models.
Rogers, however, pointed out: "As we get to a point when these machines are so good, the PC replacement cycle could be like that of the refrigerator."
Thomas Siebel of Siebel Systems was not ready to say the replacement cycle for software would begin in full until later next year, but was confident it would seriously begin at that time.
"I see the first half of next year being pretty slow, pretty flat. Then in the second half, I believe it will start to pull out," Siebel said. "I believe we will look back on the third quarter as the low point for information software."
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