Widening Credit Crunch Slowly Hitting Tech Vendors

from the bad-credit dept

By most accounts the tech industry continues to do well, but the rest of the economy is growing increasingly jittery about the long-term impact of the mortgage fallout. Of course, it's silly to assume that tech is an island, unaffected by the storms around it. Already, a number of firms have felt the effects of a tighter credit market, as it has affected their ability to do stock buybacks and M&A. And, of course, a company is only as strong as its customers, so if buyers of tech get nervous, this will start to affect corporate capital spending. That was the concern among analysts on yesterday's quarterly earnings call with Cisco. Although the company reported strong earnings, it did acknowledge weakness in the automotive and financial sectors, which makes sense given the turmoil in both of those industries. If things continue to spread to other sectors, and there's evidence that they will, more tech firms are likely to suffer from customer weakness.

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