Was This a Financial Heart Attack?

By Chris Preimesberger  |  Posted 2008-09-30 Print this article Print

Wall Street's meltdown may only be the beginning of a much longer-term problem for the IT industry-and everybody else.

"We have seen the symptoms of a financial heart attack, but it's only been a warning sign," David Hill, an IT analyst with Mesabi Group, told me. "We haven't had the full effect yet. When and if it does happen, there could be irreversible damage, even though something gets done [in Washington] to try and alleviate things."

Capital in the bank, certainly, is the name of the game right now, Hill said. "If you're a larger company, with more cash reserves, you can make payroll and not have to rely on credit or sales cash flow to stay above water. But if you're a smaller company, with less reserves, it may affect you a lot more directly at this time."

A key fact affecting the IT industry is that financial companies always invest heavily in IT products and services-and in high-tech companies themselves, Hill said.

"This [crisis] poses a very difficult problem for them [if they want] to spend more money. Even those IT companies with good credit are going to have a hard time borrowing money on a short-term basis," Hill said.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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