Banking

How does a possible recession affect IT?

On January 23, 2008, <i>The Boston Globe</i> reported that, despite the NASDAQ's recent 2% dive, the tech sector is well poised to weather a recession that is mostly contained to the United States.

According to Ubuntu's CEO, Mark Shuttleworth, Federal Reserve Chairman Ben Bernanke made a mistake in reducing the interest rate that banks charge each other for overnight loans by 0.75%. The large reductions in interest rates pushed by former Fed chief Alan Greenspan were an easier pill to swallow because of the extraordinarily low inflation at the time, possibly the result of productivity gains in China, says Shuttleworth.

Markets "are smart enough to see that all Bernanke has done is cover up the symptoms of malaise," he said and offered a gloomy forecast: "I expect that any relief will be brief, market recoveries will fade, the rout has been deferred but not averted."

Ubuntu chief decries interest rate cut (News.com)

On January 23, 2008, The Boston Globe reported that, despite the NASDAQ's recent 2% dive, the tech sector is well poised to weather a recession that is mostly contained to the United States, as most tech firms do significant business with foreign customers.

Many in the technology world remain upbeat. "I'm not in a state of panic," said Paul F. Deninger, vice chairman at investment bank Jefferies & Co. in Waltham, which focuses on high-tech firms. "If a recession lasts less than a year, the technology sector will be OK. If it lasts more than a year, then of course there'll be some fallout."

Bill Watkins, the CEO of Seagate, is apparently not concerned yet as his company "tripled Net income on a 14 percent increase in sales." Watkins went on to say that 70% of Seagate's business comes from overseas sales. Furthermore, he claimed in an interview published on 1/23/08 that while people might not be buying as many homes or cars and perhaps aren't eating out as much, they are still consuming storage products like gangbusters. This claim is easy to swallow given the storage giant's recent performance.

As recession fears grow, Massachusetts industries hunker down for a tough '08 (Boston Globe)

Take your tech recession and stuff it (News.com)

Personally, I work in education, where economic downturns can mean even more business when people come in to upgrade job skills. I suspect that my particular industry will remain mostly immune, unless the entire state of Texas goes broke. How is your industry suited to take the looming economic issues? Do you see yourself cutting down on tech consumption?

————————————————————————————————————————

Stay on top of the latest tech news

Get this news story and many more by subscribing to our free IT News Digest newsletter, delivered each weekday. Automatically sign up today!

Editor's Picks