2009 Prediction: Survival of the Fittest
Recently there have been quite a lot frustrating IT news:
“Intel reported that fourth-quarter profits plummeted 90% and revenue fell 23% as the chipmaker became the latest casualty in the economic downturn that has hammered sales of PCs and consumer electronics. With the economy in tatters as a result of falling home and stock prices, tight credit, and rising joblessness, Intel declined to offer an official revenue forecast for the current quarter.” (Source)
“Nortel Networks, the telephone equipment maker that was once Canada's largest company by market value, filed for bankruptcy protection after losses mounted and financing dried up amid a deepening recession.” (Source)
“The global economy downturn picks no sides it seems, as analysts report that Sony is expected to post an operating loss of around $1.1 billion in the business year. The higher than expected loss could put more pressure on Sony execs to accelerate a restructuring plan announced last month, under which the company would cut 16,000 jobs and further curb investment. It’s important to note however, that this is the first time in 14 years that Sony could post an operating loss, and only the second the company has faced one since it went public in 1958.” (Source)
More: Sony Ericsson posted a loss of about $245 million for the fourth quarter of 2008; LG Display records 4th-quarter net loss of $500 million on US price-fixing fine……It seems that the whole world is keeping going down.
IT enterprises are a significant fraction of the Global Top 500 enterprises. Due to the financial crisis in late 2008, we can predict there is a reshuffle of their ranking in 2009. Every dog has his day. Let’s just wait and see how it will go.
Looking at the internet market, none were encouraging. Anyway, not everyone could put up a smile face in 2009.
Affected by the global financial crisis, lots of industries which saw the sharpest drop in profits have severely cutting back on advertising budget in 2009, which obviously would take its toll on many media and advertising companies directly. Comparing to TV and newspaper, the budget of Internet advertising is relatively lower. However, the focus for investing would change substantially.
That is most companies would put limited amounts of advertisements into top-grade online media just to improve performance to price ratio. Therefore, life could be even tougher for those second-grade and third-grade online media, especially video sharing websites -- astronomical monthly budget but still lack of a mature advertising market. A rivalry situation will surely arise between numerous medium- and small-scaled websites. And those websites who do not have enough funds to resist global financial crisis will have to sharply scale back the head counts, even close down.
The conformity of superior bad discard and adjust would surely appear during this financial crisis. Those uncompetitive medium- and small-scaled websites had better increase income and reduce expenditure in advance. Meanwhile, investors will need to keep an eye on those hip sites that coming up against the current. Because they are not like these shaped medium- and small-scaled websites; they have nothing to lose. They keep developing in the crisis, and once the economy recovered, they will gain a big following among the VCs. So if you got some funds, it may be better to have a try on them.