It has been a year since Lehman Brothers filed for bankruptcy, igniting a Wall Street meltdown that plunged the United States into its worst recession in more than 70 years.
Although the tech industry was one of the last industry segments to get dragged down by the global economic crisis, it has suffered some of its greatest losses ever in the past 12 months. Here's our look at the low points. Read it and weep.
No happy holidays for Intel
Intel was among the first U.S. tech companies to feel the immediate impact of the global economic crisis. The company's fourth quarter 2008 sales plummeted 23% to $8.2 billion compared with a year earlier – only the second time in 20 years that the company reported a drop in sales. The recent sales decline was much sharper than the 1% dip Intel experienced in the fourth quarter of 2001. Even worse: Intel's profits fell 90%.
No more Nortel
On Jan. 14, Nortel filed for bankruptcy protection in the United States, Europe and its native Canada. On June 19, the largest North American maker of telecom gear announced it would sell all of its assets. The economic downturn was the final nail in the coffin for Nortel, which failed to exploit the IP router market as well as its rivals Cisco and Juniper. Nortel also never recovered from an accounting scandal in 2004.
Nasdaq's six-year low
On March 9, the Nasdaq Composite dropped to 1268.64, the stock index's lowest performance in six years. With its heavy weighting toward tech stocks, the Nasdaq Composite fared better than its non-techie rivals, including the Dow Jones Industrial Average, which reached a 12-year low, and the Standard & Poor's 500, which reached a 13-year low.
Microsoft posts first quarterly loss
Tech industry bellwether Microsoft on April 23 reported its first quarterly loss in 23 years as a public company. Microsoft reported a net loss of $388 million on revenue of $13.6 billion for the first three months of 2009. The results represented a 6% decline in revenue from the same quarter a year earlier.
Venture financing hits 12-year low
The first quarter of 2009 saw the least amount of venture capital dollars pumped into U.S. start-ups since 1997. Venture firms invested $3.2 billion in 503 deals during the quarter, according to the MoneyTree Report compiled by PricewaterhouseCoopers and the National Venture Capital Association. The network industry fared worse, falling under $1 billion in investment for the first time in 13 years.
IPO market stalls
Only two U.S. companies went public in the first quarter of 2009, raising just $722 million. These results were the lowest volume in recent history, according to PricewaterhouseCoopers. The two companies that completed IPOs during the quarter are Mead Johnson Nutrition Co., an infant formula maker, and NIVS IntelliMedia Technology Group, an audio and video equipment manufacturer. IPOs in the United States rebounded a little in the second quarter, with 12 IPOs that raised $1.6 billion.
IT market hits the brakes
Global IT spending will decline 11% in 2009, Forrester Research predicted in June. The U.S. IT market will drop 5.1%, a sharper decline than during the dot-com bust earlier this decade. All sectors — computer equipment, communications equipment, software and IT services — are expected to decline anywhere from 8% to 13%. The silver lining in this cloud: Forrester expects the U.S. IT market to pick up in 2010.
High-tech job losses mount
Tech sector job losses reached 118,108 for the first half of 2009 – the highest level in seven years, according to outplacement consulting firm Challenger, Gray & Christmas. The computer, electronics and telecom industries announced 84,217 job cuts in the first quarter of 2009 and 33,891 in the second quarter. This came on the heels of 66,312 job losses in the fourth quarter of 2008. However, it's not as bad as 2001, when 313,389 tech industry jobs were cut in the first six months of the year. (See a slideshow of most notable layoffs in 2009.)
M&A activity slows
Mergers-and-acquisitions activity in the United States fell by 49.2% in the first half of 2009 compared with a year earlier, according to Acquisitions Monthly. Only $289.4 billion in U.S. deals were announced in the first six months of the year. Among the more active tech industry buyers are EMC, which acquired four tech firms, and Oracle, which inked the biggest deal of the year with its $7.4 billion bid for Sun.
On July 16, Sun shareholders approved a $7.4 billion acquisition by Oracle. This ends the independence of a storied Silicon Valley innovator that helped popularized Unix, brought the programming language Java to life, and promoted open source technologies. Ailing for years, Sun was put out of commission when enterprises put the brakes on workstation and server purchases this year.
Cell phone slowdown
Cellular phone sales are expected to drop 8% in 2009, according to ABI Research. This once white-hot market reported an 11.9% decline in the first quarter of the year compared with a year earlier. ABI expects the trend to continue for the rest of 2009, despite the release of several popular smartphones including the iPhone 3G S and the Palm Pre.
Rumors of a take-over by Deutsche Telekom swirled around Sprint in mid-September, leaving questions about whether the beleaguered carrier can survive this downturn. Sprint's losses are staggering: The nation's third largest carrier posted a net loss of $2.8 billion for 2008 and another $978 million for the first six months of 2009. Sprint's credit was downgraded to junk status, and millions of its wireless subscribers are switching to rival carriers.
This story, "Tech's worst year ever?" was originally published by Network World.