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A High-Tech Recession?
California's Silicon Valley Still Reeling From Dot-Bomb
 Hear the segment from All Things Considered
August 1, 2001 -- An industry trade group reported Wednesday that manufacturing activity in the U.S. fell in July for the 12th straight month. In California's Silicon Valley, big companies that helped create the high-tech boom are shedding thousands of jobs.
Makers of semiconductors, fiber optic components and office equipment are all floundering. And as NPR's Elaine Korry reports, that has some observers talking about a California recession.
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Priceline: Beating the Odds?
While there has been a lot of talk about bombing dot-com companies recently, some online firms seem to be defying the odds. One example is Norwalk, Connecticut based Priceline.com.
The company this week actually reported a profit for the 2nd quarter -- its first-ever. But what makes the story even more remarkable, reports NPR's Jack Speer, is that just six months ago many anaylsts were writing off the company for dead.
In May 1999, shares of Priceline were trading at $158. But then the value of Priceline shares plunged. At one point Priceline was trading at $1.62 a share. And the company, which had expanded from its original cut-rate airline ticket business into a host of other offerings, was forced to pull back. The company has reduced its staff by more than one-third since last year.
Richard Braddock, chairman and CEO of Priceline, says focusing on the company's core business and taking some other belt tightening steps are what has lead to the company's profitability.
And there are other reasons Priceline has beaten the odds. A slowing economy has actually been a boon for the online travel travel business.
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The Golden State's economy hasn't taken a hit like this since the aerospace industry dried up in the early 1990s.
The reason this time? It's not the loss of government spending, or even a downturn in consumer spending, but cuts in corporate spending on technology.
Hundreds of small start-up Internet companies went under since the downturn began in earnest. But the numbers from the big players tell the story on a macroeconomic scale:
• For the latest quarter, Intel reported sales plunged by $2 billion dollars.
• Sun Microsystems posted its first quarterly loss in 12 years.
• Office equipment maker Hewlett-Packard laid off 6,000 workers.
• Optical networking equipment maker JDS Uniphase lost $7.9 billion dollars for the quarter, and put 7,000 more jobs on the chopping block.
However, the news in Silicon Valley isn't all bad. Cisco Systems just announced a $40-million equipment sale to a Hong Kong company, and investment broker Merrill Lynch upgraded the stock of several chip makers, giving Wall Street a boost.
Experts say Silicon Valley will recover, eventually. But many analysts expect even tougher times ahead.
Web Resources:
Priceline.com
The Industry Standard's Layoff Tracker
Dotcom Scoop
The ComPost -- "Tracking the Death of Dot Com"
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