Technology companies are prospering while Wall Street continues to deliver shocks like Merrill Lynch's $7.8 billion write-down due to a collapsing mortgage market and the reported looming departure of Citigroup Chief Executive Charles Prince. Adding to the woes, oil prices have topped $90 a barrel.
A week of turmoil in the financial industry and stock market has left technology stocks and Silicon Valley largely unscathed, reflecting trends that are making the region an economic star.
The tech-heavy Nasdaq composite index finished slightly higher over the past week, while the Dow Jones industrial average and Standard & Poor's 500 index had significant drops.
Apple had a surprisingly strong quarter, and Google stock passed $700 a share as the Mountain View Internet search company joined eBay, Yahoo, Intel, Seagate Technology and Genentech in reporting strong revenues. Microsoft revenue was up more than 23 percent from the same quarter in the previous year.
The strength extends to the broader Silicon Valley economy. A forecast by Spectrum Economics, released last month, reports that the region "unleashed itself from a faltering U.S. economy" during the past two years.
"Silicon Valley soared while the U.S. economy swooned," said the September 2007 update to the study, done for the San Jose Redevelopment Agency.
The United States may have lost its global competitive advantage in many areas, bua clear advantage, said Sung W. Sohn, Hanmi Bank's chief executive and president.
The housing market's troubles haven't affected the valley's overall economy, Spectrum said, while rising energy costs benefit high tech and green tech, one a valley staple and the other an emerging growth area.
"If you want to save energy, you have to use more electronics," Spectrum's chairman, Richard Carlson, said in an interview.
Venture capital is making a comeback in the wake of the mortgage bubble. "Compared to those screwball collateralized mortgage obligations, high tech looks simple," Carlson said.
Exports are buoying up the regional economy, too, as the declining dollar makes U.S. products a bargain to foreign buyers.
American technology companies "are huge exporters," Carlson said.
Though there was a drop of almost 2,200 in valley jobs in September over the month before, the numbers were skewed by a decline in public-sector hiring. That may be due to a late start for the school year, he said. Computer manufacturers added 1,800 jobs in September compared with a year earlier, but posted small losses from the previous month.
"The nation's economic problems will continue, but not at a level that is likely to threaten Silicon Valley's growth," the Spectrum study concluded.
The valley's job growth may slow somewhat but should outpace the nation's, according to Stephen Levy of the Center for Continuing Study of the California Economy.
"We'll be affected by housing, but less so because we didn't have a surge in home building or subprime loans," Levy said.
"We have the strongest new exciting sector in the world of opportunities around clean tech and the new funding for it," Levy said. "We are alive on the venture capital side and the Internet side. Nothing that's happened has threatened the resurgence of our economic base."
While the U.S. Commerce Department reported that the national economy turned in a solid 3.9 percent third-quarter growth in gross domestic product, economists worry that it may be the last encouraging quarterly number for a while.
That's because while consumer spending has remained strong, economists puzzle over where consumers were getting their spending money. The refinancing boom is over, and that was believed to have propelled consumer spending over the past two or more years.
"The 'Energizer Bunny' of the U.S. economy is the consumer," Carlson said. "The consumer has been taking some pretty serious hits, but it just keeps going."
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