recession

Top ten things to do in a recession

Life has its ups and downs, the economy is cyclical (especially technology's boom and bust cycles), business is feast or famine, what goes around comes around. The older you get, the more you realize that everything about life is a roller-coaster.

This week began with a global market sell-off over fears of an economic recession hitting America. For the record, I don't agree that we're heading for recession. On the other hand, it's not reasonable to believe in a perpetual bull market. That's just not the way it is. What goes up must come down. Maybe not all the way down, but somewhat.

According to Wikipedia (so it must be right), the macroeconomic definition of recession is declining gross domestic product (GDP) for two successive quarters. But these days, the term recession is associated more with declining economic factors, like corporate earnings and employment, for at least a few months.… Read more

Recession-proofing your open-source company

Reading through Morgan Stanley's January 6 report entitled "There Will Be Blood," it's hard to feel cheery about 2008. That is, unless you're an open-source company, in which case perhaps you're recession proof.

Perhaps.

But with Morgan Stanley projecting a pullback in IT spending in 2008, and especially for hardware, being open source, by itself, won't save a company. (Note: The "Blood" report is available only to clients, thus there's no link for it.)

Open-source companies should be hedging their bets by making sure they have money in the bank and lots of customers. In a downturn, it may well be easier for open-source companies to acquire new customers than their proprietary cousins, but this doesn't mean it will be easy. Having enough cash to weather the storm is critical.

As for tech, generally, the reasons for a bleak outlook are several, according to the Morgan Stanley report:… Read more

AT&T chief spooks Wall Street

AT&T's stock took a hit Tuesday after the company's CEO told investors that a weak economy is hurting the company's landline and broadband business.

Randall Stephenson, AT&T's CEO, said Tuesday during a Citigroup investor conference that the company was forced to cut off some of its broadband and landline customers in the consumer segment in the fourth quarter because they were not able to pay their bills. The news shook investors, and the stock dipped $1.87, or 4.5 percent, to $39.16 per share at the closing bell.

Stephenson was … Read more

Goldman Sachs cuts estimates on proprietary app makers, Red Hat

Remember the good ol' days of enterprise software when a vendor could foist a multimillion-dollar software package on an IT buyer and get away with also charging downstream fees for support and maintenance?

In a sign that this bleak time for IT buyers is at an end (and a bleak period is ahead for proprietary software vendors), Goldman Sachs this week cut its 2008 estimates on a wide range of software companies, citing a softening in capital expenditures for the near term. According to a Barron's blog:

Goldman cut 2008 estimates on many software stocks, focusing on enterprise exposure, pure-plays that could be harmed as customers seeks to purchase good enough substitutes from larger vendors, and vendors who sell big ticket items that could be delayed in a slower spending environment. The firm cut estimates by 1 percent on average...… Read more

Recession proofing with open source?

The VAR Guy asks an immensely interesting question: Are open-source companies recession-proof? The short answer is 'No,' but as his real question is, "Are open-source companies more resilient to a recession than their proprietary peers?" the answer is a decided 'Maybe.' Why? For one-and-a-half of the reasons he sets out, and then one more:

At first glance, open source companies have the upper hand against their closed-source counterparts during economic slowdowns. Big businesses already are migrating their Unix-based systems to more cost-effective Linux servers. One could argue those migrations will accelerate if corporate IT budgets get cut. And for new projects, IT departments would likely look at open source first because of its initial (and potential long-term) cost advantages over closed-source alternatives.

While I don't buy his (later) argument that open-source companies have lower personnel costs due to distributed, free development (This just doesn't happen that much and, in my experience, open-source developers command salary premia), I do think he's onto something. My own open-source company, Alfresco, has exploded by 400% this year in the midst of rampant economic malaise.

In fact, that may be precisely why we've done so well. But there's another point worth mentioning....… Read more