"Tech Chiefs Enter 2003 with Dim Hopes"
biz.yahoo.com
Sunday January 26, 1:24 pm ET By Lucas van Grinsven
DAVOS, Switzerland (Reuters) - Technology executives scrambled to tone down expectations for 2003 this week after hard-learned lessons that their customers cannot predict the future.
From Microsoft's (NasdaqNM:MSFT - News) Bill Gates to Michael Dell, the founder of the world's second-largest personal computer maker, few were prepared to predict a recovery in global demand for technology after the Internet bubble burst.
"There's no big uptick," Gates told the World Economic Forum.
"It's OK, but not good," said Dell, Chief Executive of Dell (NasdaqNM:DELL - News).
Many of the chiefs of the world's largest technology companies spent the past days in the Swiss ski resort, host each year to some 2,000 political and business leaders.
The corridors have been full of talk of war on Iraq and the sluggish U.S. economy. But technology executives have been taking the pulse of their market, often in back-to-back meetings with customers, ranging from aircraft manufacturing bosses to the heads of global retail chains.
John Chambers, chief executive officer (CEO) of U.S. network equipment maker Cisco (NasdaqNM:CSCO - News), who prides himself on being close to his clients, stressed the volatility of the short-term outlook.
A sales uptick like the one seen last spring, and which was widely seen as the beginning of a recovery, was followed by a slowdown after the summer.
This was the reason why Scott McNealy, CEO of U.S.-based network computer maker Sun Microsystems (NasdaqNM:SUNW - News), who had a better than expected October to December quarter, was hesitant to call a trend.
"Anybody who thinks they can forecast has been proven dead wrong," he said.
This did not prevent other executives forecasting how much money they expect to be invested in information technology after a virtually flat 2002.
Infineon's (XETRA:IFXGn.DE - News) Ulrich Schumacher, CEO of Europe's second-largest chip maker, who last year predicted that 2003 would be hard to spoil after industry's worst-ever downturn, now said: "In Europe at least in 2003 I'm not very optimistic."
REWARD ON BEING CAUTIOUS
Some executives grumbled that the looming war in Iraq put a reward on being cautious.
To be on the safe side most companies said they had tightened their belts and were investing even less in new technology compared with 2002 when many already cut their capital investments sharply.
KT Corp. (KSE:30200.KS - News), South Korea's largest fixed telecoms and broadband company, will cut investments by up to 10 percent, in a move that is typical for most telecoms companies.
Eric Benhamou, CEO of handheld computer market leader Palm (NasdaqNM:PALM - News), forecast modest growth in IT spending and a slight decline in telecoms investments.
Top 10 chip makers like Intel (NasdaqNM:INTC - News), STMicroelectronics (Paris:STM.PA - News) and Infineon, which are among the world's biggest spenders on new technology together with telecoms carriers, have already said they will trim budgets or keep them flat at best.
Cisco's Chambers voiced the new reality when he said that "tech for the sake of tech is over."
Carly Fiorina, CEO of the world's largest computer maker added that "this focus on value will be long-lasting." She saw no recovery in the U.S. economy yet.
Gerard Kleisterlee, CEO of Philips Electronics (Amsterdam:PHG.AS - News), the world's largest consumer electronics maker, said he expected above average technology spending growth in areas such as healthcare and personal safety and security.
Sun's McNealy added that technology still self-destructed after a while, which would continue to fuel demand.
"Tech still has the shelf life of a banana. It will quickly go brown and mushy. There's an opportunity to keep developing because people will need a new banana," he said.
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