Trust Me, I’m a Prophet

“I always avoid prophesying beforehand, because it is much better policy to prophecy after the event has already taken place” – Sir Winston Churchill

Every cloud, I’m told, has a silver lining but over the last two years, optimism has been in short supply for any of us working inside the IT industry.

As a fully paid-up ‘Prophet of Doom’, I’ve been warning readers that the recession in the technology sector is still far from over and have found very little to make me even mildly optimistic about the future, until now that is.

Perhaps it’s something to do with Spring and the clocks moving forward but quite suddenly and unexpectedly, several of the ‘Bellwether’ technology companies have issued results that suggest the industry is slowly crawling its way out of the dark pit into which it fell when the Internet bubble burst almost exactly three years ago.

At the time, I was playing an imaginary stock portfolio on a TV investment show and had seen my £100,000 virtual stake quickly turn into £478,000 within two months of picking companies like Red Hat, Silverstream and QXL. Around the same time, I decided that the technology sector was trading far too high and so I jumped out of both virtual and real stocks in what was lucky timing as many of my friends didn’t. That same £100,000 TV portfolio is worth less than £5,000 on today’s market, which comes as no surprise if you’ve been following the value of your pension fund lately.

This month, however, I’m seeing encouraging evidence that at last, businesses are prepared to start spending money on IT once again. This isn’t characterised by a dramatic leap in company results but rather by signs that on a project by project basis business is increasingly prepared to say “Yes” to a proposal instead of “No”.

Given the decline in global markets since this ‘recession’ began, there’s a very long climb ahead towards anything approaching the profitability of the past. It’s more than likely that business will never lavish as much on its IT ambitions as it was prepared to do in the past, perhaps with government as the single exception, as it’s less accountable to its shareholders than the Directors of real companies, looking for hard evidence of that elusive metric called ‘return on investment’.

So there you have it. Simon Moores, officially rated as one of the UK’s most cynical columnists, is suddenly encouraged by what looks very much like the first signs of recovery in this most battered of all sectors. It’s far to early to celebrate for the survivors and for thousands of small IT businesses in administration, it’s far too late but let’s wait for the next set of results, later in the Summer, for Dell, IBM, Cisco, HP, EMC, Intel and Microsoft and see if the trend remains a positive one. If it does, then perhaps the first months of 2004 will finally see the end of the worst technology recession that I can remember in the last twenty years


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