By silicon.com, 9 July 2004 15:40
It hasn't been a great week for tech, at least not purely in monetary terms. As a brief news story on silicon.com points out today, recent days have seen all kinds of warnings and share price falls from well-known technology vendors.
And while there is still a constant flow of research to suggest buyers of technology are more confident than they were one or two years ago, there are still plenty who claim not to see any great recovery in their business that warrants extra expenditure on IT.
Where does this leave us? Just as the IT industry - and all the other sundry industries that feed off it - seems to have shaken off the darkest days of the downturn, so it seems things may have again moved too quickly in the other direction.
This is much of the argument of prominent analyst Richard Holway, whose recent writings warn against optimism. He points to the recent market reactions and tell-tale signs such as the big jump in value of shares in companies such as Salesforce.com, which IPO'd successfully last month.
And, as he will point out, while his doubting voice is in the minority, it is not alone. Analysts from prominent investment banks such as Goldman Sachs and Merrill Lynch have also sounded cautionary notes.
A recovery that is really an illusion - indeed one that leads to a further, more sustained period of depression - is nothing new. silicon.com columnist Martin Brampton some time ago wrote about the phenomenon of the dead cat bounce. Rises in a fallen share's prices are often only followed by a further fall.
Other models that go even further include the triple waterfall. Imagine a graph which shows a big fall, slight rise, big fall, slight rise, big fall. That's the reason for the name and one stage worse than the dead cat bounce. It's also what the Nasdaq has been through before.
Perhaps it's better to look at recent warnings and falls in a much wider context. There will always be short-term fluctuations, both up and down. Many experts in this field will still focus most intensely on the bigger picture, looking at what will happen across years, even decades.
The trouble is that doesn't do much to calm nerves right now.
Are you worried about the last few days' bad news? Is this a blip in a steady recovery? Take our quick online poll and register your top of mind view here.
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