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No slowdown for US tech industry

No slowdown for US tech industry

AT&T, Apple, Microsoft and others report strong demand, remain optimistic

"Now the developing world is an incredible engine, and it's providing a tremendous amount of growth,'' Hanna says, adding that global demand is benefiting IBM and HP, which is expected to announce its latest financial results in May.

So far, it appears that CIOs aren't cutting staff dramatically. Despite some layoffs, including AT&T's recently announced plans to eliminate 4,600 white-collar jobs, overall IT employment is up. Allen says the Bureau of Labor Statistics data show that the US IT labor force is at its highest levels ever.

"The IT labor force peaked in 2001, and it has now come out the other side,'' Allen says. "Companies can turn the capital spending spigot on and off, but committing to the labor force is more of a commitment.''

Allen says the mix of the US IT labor force is also positive.

"We have fewer programmers and more higher-level analysts and software engineers,'' Allen adds. "We are successfully moving up the chain and keeping the higher value-add activities, and that bodes well for American tech companies.''

Another difference is that IT vendors aren't bailing out on trade shows. Interop, which will be held in Las Vegas this week, says the number of exhibitors is up 25 per cent, including first-time participant Amazon.com.

"In 2001/2002, it was very evident that companies were dropping out and people weren't showing up. So far, we are not seeing that,'' says Lenny Heyman, general manager of Interop.

Keeping an eye on innovation

One indicator to keep an eye on is the impact of the US downturn on innovation in the IT industry.

Investments in Internet start-ups hit US$1.3 billion in the first quarter of 2008, the same level of investment as a year ago, according to the MoneyTree survey compiled by PricewaterhouseCoopers and the US National Venture Capital Association using data from Thomson Financial. Venture firms closed 195 Internet-related deals in the first quarter of this year, compared with 167 deals in the first quarter of 2007.

The first-quarter-2008 numbers are down slightly from the fourth quarter of 2007, when venture firms invested US$1.4 billion in 217 Internet-related companies.

Overall, venture capital investments declined 8.5 per cent in the first quarter of 2008 compared with the fourth quarter of 2007. Venture firms invested US$7.1 billion in 922 deals in the first three months of this year, compared with US$7.8 billion invested in 1,045 deals during the last three months of 2007. Leading areas of investment were biotechnology and software.

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