Terrorist Attacks Alter Landscape for Tech Companies

Although the technology industry hasn't been affected by the Sept. 11 terrorist attacks to the same degree as airlines, insurers or financial firms, the assault changed the playing field for many tech companies.

Due to the broad and diverse nature of the tech industry, the attacks have impacted different sectors in different ways.

Software and PC firms likely will get hit harder in coming months than semiconductor makers and biotech companies, analysts said, while some tech sectors — such as telecom and storage — have seen increased sales since the attacks.

Here's a look at how eight key tech sectors have fared since the attacks, and what analysts say is in store for them.

Software | Storage | Biotech | Personal Computers | Semiconductors Online Travel | Telecommunications Security

Software: Hit Hard by Air Travel Slowdown

For software companies, the last three weeks of the third quarter are critical, and the Sept. 11 terrorist attacks made a bad situation worse, analysts said.

Most software companies book 50 percent of their sales in the last month of the quarter and as much as 40 percent in the last two weeks.

"Over the next two weeks, it's going to be very difficult for software firms to travel and conduct face-to-face meetings to close multimillion-dollar deals," said Rob Black, money manger of Gib Investment Management.

"You need to get the sales guy from the West Coast to the East Coast to close the deal. Flights are down, tensions are high right now," Black said. "There's going to be a lot more corporate layoffs. So buying software is a very low priority right now."

Business software companies are expected to be the hardest hit in the industry because of the already slowing demand for their products. Some customers are either delaying upgrades because of the shaky economy or are buying security software instead.

Software giant Oracle, for example, is forecasting lower revenues and more uncertainty in the sector because of the attack. Company executives said sales of its software license fees for the fourth quarter will drop about 15 percent from a year ago — lower than forecasts made before the attack.

In addition, the attack prompted analysts at Goldman Sachs to downgrade the stocks of several software companies this week, including Oracle, Microsoft, PeopleSoft, Siebel, and BEA Systems.

Storage: Demand for Data Storage Surges

While analysts predict a mixed picture for tech companies in the wake of the Sept. 11 terrorist attacks, there seems to be a consensus that the tragedies might mean more business for firms in the data storage business. As companies look to protect and backup their data, analysts expect the demand for data storage products to increase.

Stocks of storage hardware and software makers posted sharp gains this week as investors bet corporations across the country will begin revamping their data backup systems.

Out of all the tech sectors, storage might be the only one to see a rise in sales due to the attacks, said Todd Kort, an analyst with Gartner.

But even before the attacks, storage was getting a lot of positive buzz. Storage is a $30 billion-a-year business and growing rapidly.

In 1998, most companies required an estimated 116,000 terabytes of network data storage space, and today, it's closer to 1.4 million terabytes. According to IDC, the need for storage has grown 80 to 100 percent per year for the past decade.

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