technology sector

For the first time, revenues for the semiconductor industry are expected to drop from year to year. The industry, which analysts first expected to grow in 2009, is now expected to nosedive for the next few years, beginning with a 16 percent drop from 2008 to 2009, according to Gartner.

Worldwide, the semiconductor industry is expected to drop to $219.2 billion in 2009 from 2008 revenues, which have reached $261.9 billion -- a four percent drop from 2007.

Industry analysts say the technology sector needs to brace for a tough quarter and year. There's no longer any doubt about the U.S. being in a recession. The questions at this point are how deep it will be and how long it will last.

As consumers tighten their wallets, so will businesses tighten IT budgets. Computer sales are falling and sales of other products such as communications equipment and software are expected to slow, according to a report released Tuesday by Forrester Research.

Hewlett-Packard Co. surprised Wall Street on Tuesday by saying its earnings will be slightly above analysts' expectations, going against the grain as other technology bellwethers have slashed forecasts and posted weak results in the sagging economy.

Its shares climbed more than 12 percent in morning trading.

Many of the problems facing Advanced Micro Devices Inc. are of its own making. But the limited choices the chip maker has for solving its troubles are symptoms of an affliction sweeping through Silicon Valley.

Slumping sales, big layoffs and devastated stock prices are becoming the norm, resurrecting memories of the malaise that gripped the Valley for years after the dot-com meltdown in 2000.

Technology appears to be one of the least hard-hit sectors in an economy beset by unemployment at a five-year high.

The Labor Department reported Friday that companies slashed their payrolls by 84,000 jobs last month, sending the country's unemployment rate to 6.1 percent from 5.7 percent in July.

The European Commission, a thorn in Microsoft's side for its antitrust campaigns against the software giant, is falling short in its own internal attempt to promote competition in the technology sector.

The European Union executive has so far not followed its own policy of purchasing office software and operating systems with open standards, as well as Microsoft products.

"For the moment we are working in a Microsoft environment," said Christos Ellinides, director of corporate IT solutions and services, who recommends software for the commission.