Silicon Insider: How the Election Plays in the Valley

Nov. 12 -- Let's just say it wasn't the best week in high tech, or in Silicon Valley.

For one thing, the Gartner Group released a report predicting that a flattening in corporate IT spending would soon lead to a massive consolidation in the PC industry. In particular, the second-tier PC companies — Acer, Fujitsu, even Apple — may soon face oblivion.

If that wasn't bad enough, in Silicon Valley, both Advanced Micro Devices and Applied Materials announced massive layoffs. As these two companies, giants in chips and chip equipment manufacturing, are bellwethers of the health of high tech, this news was particularly worrisome.

Still, you could rationalize both announcements: the Gartner report as just the latest in a long line of inaccurate predictions by industry watchers made just before a market turnaround, and the layoffs as a classic cost-reduction move to free capital for a ramp-up.

But the one piece of bad news that could not be explained away was the results of last Tuesday's election. Everyone else is talking about the Republican sweep, but here in Silicon Valley, the shrewdest folks aren't looking at Washington, but Sacramento.

Another Four Years of Davis

The Valley is a Democrat stronghold, mostly for cultural reasons. But if we have a liberal heart, like true entrepreneurs we have a conservative wallet. Economically, this Valley is pure GOP.

So, for all the pursed lips and shaking heads about the election, the general assumption is that a Republican White House, Senate and House will be good for high tech. Republicans like corporations, they love entrepreneurs, and they actually understand stock options.

So, everything suggests good times ahead … and God knows we need it, because the other big news item around here last week was that local unemployment is now at the worst level in a decade. And the 'Pubs know America needs a strong tech industry for its economic growth, its world leadership and its defense.

But there's one little problem — and that was the biggest news item around here last week: Gray Davis, the Democrat even Democrats love to hate, was re-elected Governor of California. When we woke up Wednesday and read the tally, we knew we were doomed.