55% of Tech Leaders See IPO Market Stalled Until 2010 or Later; VC Leaders
See Current Crisis Eclipsing the Tech Bubble Burst of 2000
EAST PALO ALTO, Calif., Oct. 20 /PRNewswire/ -- In the midst of a
financial and economic crisis, and in the midst of uncertainty associated
with a historic presidential election, the DLA Piper 2008 Technology
Leaders Forecast Survey found that industry leaders have a host of
concerns, but are fundamentally optimistic about future opportunities.
The survey, measuring the attitudes and perspectives of top executives
within the technology industry, reveals that 75% of respondents say they
have been adversely affected by the economic slowdown. Only 15% of
respondents think the U.S. economy is likely to rebound in the first half
of 2009 and more than half of respondents (55%) believe the IPO market will
not begin to rebound until at least 2010. With responses received between
September 23 and October 6, the survey was conducted as Congress debated
the $700 billion bailout bill and during a tumultuous two weeks on Wall
Street.
"Approximately 90% of respondents do not believe the IPO market will
return until at least the end of 2009 which is not surprising given the
extent of the current economic crisis and the shutdown in the IPO market
that occurred following the Tech Bubble Burst in 2000," said Peter Astiz,
Global Co-Head of the DLA Piper Technology Sector Practice.
"On an operating level, we asked technology executives how they
expected the economic crisis would impact their business. Almost two-thirds
of respondents said they expect their revenues to decline as a result of
the economic crisis. However, in a clear sign of optimism over their medium
and long term prospects, only a quarter of respondents indicated they are
reducing their sales and marketing expenses, and even a smaller percentage
of executives were planning on cutting their research and development
expenses. This seems to indicate a belief that the impact on the technology
sector will be more short term in nature and that companies plan to
continue to strategically invest in their businesses," added Astiz.
VCs and Tech Company Executives Differ
Respondents deploying capital (Venture Capitalists) reflected a much
different view of the financial crisis than those needing capital
(companies themselves), which is understandable given that VCs have a
greater focus on exit strategies. Nearly half (47%) of finance and venture
capital respondents say the current financial crisis will have a more
adverse impact on the technology industry than the Technology Bubble Burst
of 2000. However, 67% of technology company entrepreneurs and leaders
disagree.
"Two-thirds of technology executives surveyed told us that the current
crisis would not be as severe as the Tech Bubble Burst of 2000. Those
responses reflect an opinion that the impact of the current crisis on the
technology industry is more residual than the 2000 crash," noted Astiz.
"However, of the respondents focused on venture capital, about half said
the current crisis would be more severe. We think the difference between
the two groups was largely due to the emphasis of Venture Capitalists on
exit issues such as M&A and IPOs - which are likely to be more adversely
impacted in the near term - than longer term operating results."
The survey yielded a number of other interesting conclusions,
including:
-- 85% of respondents think we are in for another year or more of the
current economic conditions, signaling a collective view that the present
financial challenges are not a short-term phenomenon.
-- Clean technology is one of the bright areas amid the financial
crisis and economic turmoil, with tech leaders believing the sector will
get a boost given the continuing economic and political pressure towards
greater U.S. energy independence.
-- With almost 90% of respondents saying the Chinese consumer market is
an exploitable opportunity, technology industry executives still believe
China represents a significant opportunity as both an end market and a
supplier.
-- Almost half of all respondents (48%) do not have an open source
software policy, which experts warn could open them up to legal exposure.
-- While there continues to be considerable discussion about innovation
coming out of emerging markets, 55% of respondents think the U.S. will
still lead in producing the next generation of "leap-frog" technologies in
the coming decade.
Beyond the hard data captured, survey respondents provided some
interesting perspectives when asked to share the greatest opportunities in
today's technology industry. Many respondents see green technology and
clean technology as the segments most poised for growth.
One respondent said: "Clean tech is the greatest opportunity in the
industry for the next 12 months and likely for the next 12 years. The U.S.
tech industry knows how to innovate, the greatest incentives to innovate
will be in clean tech."
For a copy of the full results of the survey, please contact John Corey
at (312) 252-4102 or visit
http://www.dlapipertechleaderssummit.com/techsummit/survey/.
About DLA Piper (http://www.dlapiper.com)
DLA Piper has 3,700 lawyers in 26 countries and 65 offices throughout
the U.S., U.K., Continental Europe, Middle East and Asia. It has leading
practices in corporate, finance, human resources, litigation, real estate,
regulatory and legislative, tax, and technology, media and communications.
Former Senate Majority Leader George J. Mitchell is chairman of DLA Piper.
In certain jurisdictions, this information may be considered attorney
advertising.
SOURCE DLA Piper
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Related links:
http://www.dlapiper.com/
CONTACT:
Peter Astiz, Global Co-Head of the DLA Piper
Technology Sector Practice, +1-650-833-2036; or John Corey,
+1-312-252-4102, or Dan Cahill, +1-415-522-3999, both Media
Relations, Greentarget Global Group
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