Close
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
Read Down
Sign in
Close
Welcome!Log into your account
Forgot your password?
Read Down
Password recovery
Recover your password
Close
Search
Logo
Logo
  • Latest News
  • Artificial Intelligence
  • Big Data and Analytics
  • Cloud
  • Networking
  • Cybersecurity
  • Applications
  • IT Management
  • Storage
  • Sponsored
  • Mobile
  • Small Business
  • Development
  • Database
  • Servers
  • Android
  • Apple
  • Innovation
  • Blogs
  • PC Hardware
  • Reviews
  • Search Engines
  • Virtualization
More
    Home Applications
    • Applications
    • Networking
    • PC Hardware

    Financial Market Turmoil Affecting IT

    By
    Karen Schwartz
    -
    August 14, 2007
    Share
    Facebook
    Twitter
    Linkedin

      With financial markets in turmoil around the world and the subsequent tightening of credit markets, it has become much harder for companies of all types to continue doing business as usual, much less to grow and prosper.

      That may be particularly true in the technology sector, which sometimes operates on thin margins, and at the mercy of venture capitalists and other funding sources.

      In general, large, established technology companies will weather the storm fairly well, said Gus Tai, general partner at Trinity Ventures, a venture capital firm in Menlo Park, Calif.

      “Well-managed IT companies have contingency plans and access to capital if they arent generating cash, so generally speaking, most IT companies will be fine,” he said.

      Pointer > What Could the Credit Crisis Mean for IT? Click here to read more.

      Also fairly insulated against current conditions are technology distributors. In an industry brief released August 13, Brian Alexander, senior vice president of equity research at Raymond James, a diversified financial services holding company based in St. Petersburg, Fla., noted that he did not expect IT distributors to be adversely impacted by current market conditions. The reason, he said, is that distributors have spent the past few years re-orienting their financial maneuvering, resulting in lower debt balances.

      Alexander noted that many of these organizations also are protected by credit facilities that largely insulate distributors from changing credit spreads.

      But not all IT companies may fare as well. Companies closer to the financial industry, such as financial services firms, may start to feel the pinch, Tai said.

      “Financial services has been one of the best verticals for launching and growing new IT companies, and, historically, companies developing leading-edge technology look at financial services companies to adopt their technology first,” he said. “So financial services companies that are still growing will be slowed down for the next several quarters because of whats going on in the financial markets.”

      Smaller, private IT companies that rely on raising money from venture capitalists or smaller private equity firms also may be at risk, as will IT organizations in the process of buying other IT companies in their market segment. Strategies for both types of companies will slow, Tai predicted.

      If the markets recover within a few quarters—something Tai expects to occur—the rate of IT startups shouldnt be adversely affected, but if it were to continue for a year or more, the rate of new IT companies will decline.

      Given the situation today, how smart was VMware to issue its IPO?

      Judging from the market reaction, very smart, said Deven Parekh, managing director of Insight Venture Partners, a New York-based company with a controlling interest in Ziff-Davis Enterprise, which owns eWEEK.

      “There will always be a strong demand for companies that have fast growth and great margins like VMware, there will always be a strong demand,” he said. “Other companies with slower growth and unproven profitability like DemandTec (a retail software company, based in San Carlos, Calif.) got a less strong reception.”

      VMware could probably weather just about any storm, given its strength, Tai agreed.

      “VMware is one of the fastest-growing software companies in the history of software. Its fundamentals are so strong that it could have gone public any time it chose, and it wont experience any cyclical market issues that would affect performance,” he said.

      Karen Schwartz
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.
      Get the Free Newsletter!
      Subscribe to Daily Tech Insider for top news, trends & analysis
      This email address is invalid.

      MOST POPULAR ARTICLES

      Latest News

      Zeus Kerravala on Networking: Multicloud, 5G, and...

      James Maguire - December 16, 2022 0
      I spoke with Zeus Kerravala, industry analyst at ZK Research, about the rapid changes in enterprise networking, as tech advances and digital transformation prompt...
      Read more
      Applications

      Datadog President Amit Agarwal on Trends in...

      James Maguire - November 11, 2022 0
      I spoke with Amit Agarwal, President of Datadog, about infrastructure observability, from current trends to key challenges to the future of this rapidly growing...
      Read more
      IT Management

      Intuit’s Nhung Ho on AI for the...

      James Maguire - May 13, 2022 0
      I spoke with Nhung Ho, Vice President of AI at Intuit, about adoption of AI in the small and medium-sized business market, and how...
      Read more
      Cloud

      IGEL CEO Jed Ayres on Edge and...

      James Maguire - June 14, 2022 0
      I spoke with Jed Ayres, CEO of IGEL, about the endpoint sector, and an open source OS for the cloud; we also spoke about...
      Read more
      Applications

      Kyndryl’s Nicolas Sekkaki on Handling AI and...

      James Maguire - November 9, 2022 0
      I spoke with Nicolas Sekkaki, Group Practice Leader for Applications, Data and AI at Kyndryl, about how companies can boost both their AI and...
      Read more
      Logo

      eWeek has the latest technology news and analysis, buying guides, and product reviews for IT professionals and technology buyers. The site’s focus is on innovative solutions and covering in-depth technical content. eWeek stays on the cutting edge of technology news and IT trends through interviews and expert analysis. Gain insight from top innovators and thought leaders in the fields of IT, business, enterprise software, startups, and more.

      Facebook
      Linkedin
      RSS
      Twitter
      Youtube

      Advertisers

      Advertise with TechnologyAdvice on eWeek and our other IT-focused platforms.

      Advertise with Us

      Menu

      • About eWeek
      • Subscribe to our Newsletter
      • Latest News

      Our Brands

      • Privacy Policy
      • Terms
      • About
      • Contact
      • Advertise
      • Sitemap
      • California – Do Not Sell My Information

      Property of TechnologyAdvice.
      © 2022 TechnologyAdvice. All Rights Reserved

      Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.

      ×