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Saturday, November 15, 2008

Tech Industry, Long Insulated, Feels a Slump - NYTimes.com

Tech Industry, Long Insulated, Feels a Slump - NYTimes.com: "The technology industry, which resisted the economy’s growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown."

New York Times continues.

In the span of just a few weeks, orders for both business and consumer tech products have collapsed, and technology companies have begun laying off workers. The plunge is so severe that some executives are comparing it with the dot-com bust in 2000, when hundreds of companies disappeared and Silicon Valley lost nearly a fifth of its jobs.

October “was like turning a switch,” said Robert Barbera, chief economist at the Investment Technology Group, a research and trading firm. “Everything pretty much shut down.”

This week Nokia announced that there will not be a growth of mobile phones sales 2009. Nevertheless, the CEO Olli-Pekka Kallasvuo thinks Nokia will maintain its position as a market leader and its 40 per cent market share. The company has a big cash reserve to sustain the coming hard times. The product line has been updated. But the market is down. People are afraid to buy. We're not changing to new gadgets with the same frequency as before.

After industry leaders like Intel and Nokia warned of slowing sales this week, investors aggressively sold technology stocks. On Friday, the Nasdaq composite index, which is full of technology names, fell 5 percent. Advanced Micro Devices and eBay both dropped more than 10 percent.

Are consumer buying smart phones or low cost regulars?



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