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To: ms.smartest.person who wrote (886)	4/1/2001 5:13:24 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Doom Times Ahead For Silicon Valley? By Michael Singer internet.com Staff [March 27, 2001- Singapore] "If you work with the B2Bs you are on solid ground and if you add in B2B tools within a supply chain, you are on very firm ground." If you thought last year was a nightmare for Silicon Valley's Internet tech sector, a new study may wake you up screaming in a cold sweat. The report, by New York-based Cushman & Wakefield and Berkeley-based Rosen Consulting Group, projects that about 80 percent of the dot-com companies in the Bay Area will collapse in the next year. The study set for release Thursday is based on a review of the debt levels and current and projected earnings of a sampling of 150 publicly traded Internet companies. The outlook is not good. Both firms estimate a 70 percent chance of recession in the Bay Area. The study estimates the dot-com downturn will affect the Telecom and more traditional technology firms next. "Forty-nine of the stocks in the NASDAQ 100 Index are California firms," the report says. "Without financing, with steep stock price declines and with dwindling product demand, these sectors are reducing their overhead expense and laying off workers." Already Cisco, Nortel, Lucent, Worldcom, Intel, 3Com, Compaq, Motorola, among others, have announced combined job cuts of more than 83,000 workers during the last five months. Rosen Consulting, which specializes in economic and real-estate consulting, estimates that about 150,000 people in the Bay area were employed in the dot-com sector at the beginning of last year, and about 22,000 of those jobs have been lost since then. That kind of exodus has already had an impact on the local real estate marketplace. Rosen estimates that dot-com companies as of last year had leased eight million square feet of the 66 million square feet of total office space in San Francisco. The report, called "San Francisco: A Tale Of Two Office Markets," says: "The combination of continued Internet dispersion, a reduction in the growth of high-tech and financial services firms and a slowing national economy will lower the rate of San Francisco office employment growth (office employment in San Francisco has expanded at an average 4.4 percent rate between 1996 and 2000, compared with a 15-year average rate of 2.6 percent) and further reduce demand for office space." The study found that average rents for top-tier, class A space in the South of Market area fell 8.5 percent to $63.60 a square foot during the first three months of the year, while class B office space fell 24 percent to $55.32. In the Financial District, average rents for class A office space declined a more modest 7.5 percent to $74.16. But Is It That Bad? Jack Staff, Chief Economic Research Analyst with Redwood City-based Zona Research says not every sector within the Internet industry will fall victim to the dot-com bust. "That's because not all Web-based companies are alike," says Staff. "For example, if your company deals in the B2C marketplace, I'd say you are on shaky ground. Compare that to the over saturated Web design companies who are economically terminally ill. If you work with the B2Bs you are on solid ground and if you add in B2B tools within a supply chain, you are on very firm ground." While the news is bad for some, Stephen Levy, director of the Center for the Continuing Study of the California Economy in Palo Alto says it is all a part of business cycles. "Those that meet the test of the market will survive and grow and prosper," says Levy. MORE ASIA CYBERATLAS asia.internet.com