Friday, May 23, 2008

MHT survey shows tech executives' confidence about growth plummets

By Mass High Tech

At a time when businesses and consumers are fretting about issues such as oil prices and the credit crunch, New England technology executives too are wavering in their confidence that the tech sector will continue to grow.

Mass High Tech’s quarterly survey of technology executives’ sector growth confidence showed a sharp drop in the first quarter of 2008 when compared with the prior three months and with the same quarter last year.

While more than 60 percent of respondents had voiced confidence in the previous periods, only 53.3 percent of the 830 participants in the first-quarter 2008 survey expressed moderate or higher confidence. Confidence levels were down throughout the Internet, telecom, bio/medtech and software sectors. The only exceptions came in comparisons with first-quarter 2007 confidence levels in bio/medtech, where nearly 37 percent of respondents said they were “very confident,” up dramatically from both previous surveys.

In addition, the number of executives issuing a vote of no confidence is on the rise. In the latest survey, 7.8 percent of New England executives said they were “not confident” in tech-sector growth — up from only 4.2 percent in the same survey a year earlier.

While confidence was down in the survey, executives interviewed by Mass High Tech staff writers were confident in their own companies and industries but expressed skepticism on larger or cross-industry trends.

“The numbers are still on track to be fairly strong,” said Robert Hughes, vice president of Black-I Robotics Inc. of Tyngsborough. “We’re very optimistic.”

However, when asked about the overall tech sector, Hughes noted, “I see nothing but strength in the software space. Manufacturing still has problems; companies are still heading out West.”

Saying he is “cautiously optimistic” about medical technology, Amar Sawhney, CEO of I-Therapeutics Inc. in Waltham, noted, “The startup environment is good, though seed funding for first-time entrepreneurs continues to be hard. The bellwethers like Boston Scientific and Hologic are still taking some time getting back on track.”

John Murphy, executive vice president of sales for Cedar Point Communications Inc. in Derry, N.H., reported that he is “fairly optimistic” about the telecommunications industry because the bundling of voice, data and video is working at the consumer level. However, he was less upbeat about the domestic tech sector.

“If I were only focused on North America, I would give it a C or C-minus,” he said. “But looking globally, I would give it a B or B-minus. Ironically, anyone (overseas) that is benefiting from the high price of oil is spending on technology.”

Health care’s prognosis

One executive was particularly confident about regional growth, particularly as it relates to New England’s talent to draw out-of-state companies here.

“I think the Boston technology market is in a very strong position. A lot of larger companies like Google are seeing expansion opportunities here,” said Paul Roscoe, president of health-care access-control vendor Sentillion Inc. of Andover.

Robert Weiler, CEO of health-care IT firm Phase Forward Inc. in Waltham, said people would continue to need life sciences products and that other technology “has moved from a discretionary item to an integral part of a corporation’s infrastructure. You are going to see the infrastructure technology companies continue to do well.”

In general, senior executives tended to be more optimistic, which Cedar Point’s Murphy likened to a sea-level view that shows turbulent waves compared with an elevated position that offers views out to the horizon in all directions.

“Typically, the senior execs have much more involvement and knowledge of the business prospects with existing customers, potential customers and partners. The scope of their view is both domestic and international and encompasses both short-term and longer-term technology and buying decisions,” Murphy said.

Defense, consumer outlook

Executives in defense and consumer businesses were bullish on their own companies but tempered overall.

“We’re a consumer-facing business, and the more people do online, the more our business is going to rise, and the popularity of social networking means more are online than ever,” said Greg Boesel, president of Swaptree Inc. in Boston, which enables online trading of books, CDs and DVDs. “Businesses that succeed are the ones that leverage technology.”

Citing $135 million in new business in 2007, James P. Regan, chairman and CEO of Dynamics Research Corp. in Andover, noted that change is in the air for the government IT market, including a new administration, war funding and a shift in federal funding priorities toward the civilian market, but added, “We expect significant changes, but we believe we are well positioned to deal with them.”

Retired U.S. Navy Vice Admiral Dennis McGinn, CEO of RemoteReality Corp. in Westborough, said of the overall tech market, “I think it’s reflective of the general mood in the country and concerns by some folks about the economy: If we’re not in a recession now, we may be soon. But I think it will be short.”