The Telegraph
Since 1st March, 1999
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Shorn of profits & bravado, titans still gather at Davos

Davos, Jan. 27: When the Swiss police blocked off this Alpine village against a band of antiglobalization protesters on Saturday, one of the globe-trotting capitalists stuck outside was Howard Stringer, the chief executive of the Sony Corp. of America.

As he trudged up a snow-dusted hill, looking for an alternative route into the World Economic Forum, Stringer mused that the demonstrations seemed almost beside the point at this year’s gathering of chief executives, prime ministers and those who carry their cell phones.

The global economy, he said, remains on the ropes, while the preparations for war in Iraq have transformed the conference, once a showcase for the high-technology ambitions of companies like Sony and Microsoft, into a forum for criticism of the United States and its foreign policy.

“How do you separate the protesters outside from the hostility inside'” said Stringer, who is a repeat visitor to the conference. “For the first time, the demonstrations seem peculiarly redundant.”

The reversal of fortune seems especially notable for the leaders of American technology, internet and media companies. Fresh-faced moguls like Michael S. Dell of Dell Computer and Steve Case, of AOL Time Warner, used to hold court here, swapping views on panels with world leaders like Prime Minister Tony Blair of Britain.

Now, most maintain lower visibility, steering clear of high-blown discussions about technology and mankind to meet with customers, prospective customers and the occasional reporter, to whom they convey the by-now familiar message that the economic climate is still frigid.

When they do venture out, they are sometimes taken aback by the themes that dominate the conference. Scott G. McNealy, the chairman and chief executive of Sun Microsystems, found himself on a panel about how to secure the world’s information infrastructure from attack.

“I suppose you could ask, what good is it to have Web browser access when your building falls down'” said McNealy, who would rather discuss the wonders of Java software than the evils of terrorism.

Like its peers, Sun has suffered through the downturn, reporting heavy losses and laying off employees. McNealy said he was encouraged that the company reported a 6 per cent increase in sales, and smaller-than-expected losses, in the most recent quarter.

But he declined to predict when things might recover, saying, “People are only guessing as to what’s going to happen.”

William N. Joy, the software designer with whom McNealy founded Sun in 1982, was more blunt.

“What if the reality is that people have already bought most of the stuff they want to own'” he said.

Famous in Silicon Valley for his unconventional views, Joy does not stick to a corporate script. But those executives who do expressed little optimism about the health of the economy.

“It’s not deteriorating, but it’s not recovering either,” said Carly Fiorina, chief executive of Hewlett-Packard.

Fiorina, whose company supplies the wireless pocket PCs handed out to the conference participants, said she thought the technology industry would never regain the momentum it had in the 1990s, when its annual growth rate was four to five times that of the broad economy.

In good times, Fiorina said, it might grow at twice the rate of the economy. She added that Hewlett-Packard, which is still digesting its acquisition of Compaq Computer, could grow 7 per cent to 9 per cent a year.

“Technology is more woven into society,” she said. “It is becoming a more mature and stable industry.”

John T. Chambers, the chief executive of Cisco Systems, said his clients had shown no signs of resuming their technology purchases. Like Sun, Cisco has been devastated by the sharp cutbacks in corporate spending on computer networks, routers and other equipment.

“The risk-reward factors are more conservative than I’ve ever seen in my business career, which is a nice way of saying that CEOs are being very cautious in their spending this year,” Chambers said.

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