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) October 20, 2008 -- In the midst of financial and economic uncertainty, and during 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.
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The survey, released on the eve of the firm's Global Technology Leaders Summit, yields new insight into the impact of the current financial crisis and a sputtering global economy on the technology sector. The survey polled technology leaders on a range of issues including the outlook for venture capital and other financing; when the IPO market is expected to rebound; plans for R&D, sales and marketing; the perceived impact of the presidential candidates on the technology industry; and existing opportunities in open source software, clean technology, and emerging markets, among other issues.
DLA Piper will highlight the survey's findings and release as-it-happens coverage of the Global Technology Leaders Summit on its Tech Summit Blog.
Overall, more than 75 percent of respondents indicated the economic slowdown is adversely affecting them. 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.
"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. "One of the interesting consequences of this is that if more of the stronger companies that likely have the best IPO opportunities elect to choose an M&A exit, then the results of the companies that do IPOs, on average, is skewed downward."
While almost two-thirds of respondents indicated that they expect their revenues to decline as a result of the current crisis, only a quarter of respondents expect to reduce their sales and marketing expenses, and even a smaller percentage plan to reduce their research and development expenses.
"This is a clear sign of optimism over their medium- and long-term prospects and 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," said Astiz.
VCs and Tech Company Executives Differ
But 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. This illustrates a difference in perception between the two groups.
"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."
A clear opportunity amid these challenges, the survey found, is in green technology, said Brad Rock, partner at DLA Piper.
"There's a convergence going on where technologies from different parts of the economy are finding opportunities and ways to add value in the clean technology space," Rock said. "In real estate, for example, you found that a few years ago people were only focused on cost. But now, there is a drive toward LEED certification and recognition that doing things more efficiently and with a long-term view adds value and is the right way to go."
Among the survey's other key findings:
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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.
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