If there is a recovery going on in the American economy, the high-tech industry
is not participating, according to the chief executive officer of Intel.
Intel CEO Craig Barrette said this week that the company's second quarter sales
are plain flat. Intel is a bell weather company since most computer and other
electronic gear runs on Intel processors, a recovery in the high-tech industry
without Intel seeing an increase in sales is virtually impossible. 'I know we've
seen relatively strong announcements of Gross Domestic Product growth in the
United States, but as far as I can tell, that hasn't translated into corporate
profitability or corporate IT investment growth,'' said Intel CEO Craig
Barrette. "We're looking at a relatively flat second quarter. I don't think
you're going to see any substantial uptake in the industry until corporate
profits increase and you see investment in corporate IT infrastructure. I wish I
had something better to tell you."
According to recent government statistics, the US GDP grew at an annual rate of
5.8 per cent in the first quarter, its fastest pace in more than two years.
Intel's announcement was a key factor in Monday's 100+ point drop in the Dow
Jones Average on the New York Stock Exchange.
One indication things may start to turn around in the hard-hit IT industry is a
report issued this week by the Information Technology Association of America
industry group which said hiring managers at member companies expect to hire
some 1.1 million IT-related jobs over the next 12 months.
Some analysts, however, said the projection appears overly optimistic
considering the continued low level of IT investment in the general economy.
Even if only half the projected number of jobs would be filled, that would bring
the employment level in the IT industry back to the peak of early 2001. The
current economic conditions just doesn't seem to warrantee employment levels at
the level of the industry's 2000-2001 peak.
During 2001, some 525,000 jobs were lost due to massive cutbacks in the
computer, networking, communications, software and other IT industries. Current
employment level is at 9.9 million, down from 10.5 million jobs in early 2001.
Key to strong new hiring trends in IT will be an increased level of IT spending.
"We're coming out of a recession, and the lock that's been on IT spending
over the last 12 months is beginning to become unlocked," said ITAA
president Harris Miller.
Intel doesn't see any signs of recovery
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