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JPMorgan Chase: Tech scene is getting brighter

Investment bank says the mood was upbeat at its annual get-together of leading and up-and-coming technology companies.

Investors left JPMorgan Chase's technology conference Thursday inspired by the prospect of some large, small and unconventional deal opportunities.

While the 33rd annual showcase of leading and up-and-coming technology businesses has started to look a bit more like a gathering of any other established industry, this year's event also had the spark of an entire crop of young private companies that boast promising technologies and stable businesses, said Christina Morgan, vice chairman of JPMorgan Chase.

"So far, 2005 is looking pretty decent, but we are still recovering from a hell of a crash."
--Christina Morgan
vice chairman, JPMorgan Chase

"Oracle has pointed out that they are a large multibillion-dollar company that in many ways has more in common with other mature industries like steel or banking than with their entrepreneurial roots," Morgan said. "On the other hand, one of the fun places to be at this conference has been in the private company room. I am just so impressed with the size and growth rate and the experienced management teams at these companies."

At this year's event, JPMorgan hosted an unusually large collection of private companies in sectors from consumer Internet to biometrics, grid computing and radio frequency identification, or RFID--a technology for remotely storing and retrieving data.

Some of the private companies presenting included Merchant e-Solutions, which provides online payment services for banks and other businesses; the online concert and sports ticket marketplace Stubhub; and Purcell Systems, which makes cabinets to store telecommunications and power equipment inexpensively in towers and office buildings. Several of these business models recall the Internet start-ups of six years ago. Now, with a larger and confirmed base of Internet consumers hungry for better services, the investment establishment is receiving these businesses with quiet confidence rather than hype.

Christina Morgan, who began working for the boutique investment bank Hambrecht & Quist and spent much of her career working with young Internet and high-tech start-ups before H&Q was acquired, said that even the start-ups have grown up.

"It's a far cry from the dot-com era, when we had people standing up who headed companies that had been incorporated nine months ago," she said. "These are far more solid companies."

With this experience has come a more realistic outlook about cashing in on their businesses, Morgan said. Fewer are waiting for the ideal conditions to complete an IPO; more are open to larger businesses acquiring them.

Oracle chairman Jeff Henley said that even the largest and most mature technology businesses are always on a quest to grow further by acquiring market share and innovative technologies. Henley, who addressed the conference Monday, said the company is actively pursuing more acquisitions, following its recent purchases of Retek and PeopleSoft.

Said Morgan: "The technology business is just like the ocean. The big eat the small. Innovation never dies and there are lots of small companies to be eaten." She offered a guardedly optimistic outlook about the state of the high-tech business five years after the devastating bust.

"We had a real shock to the system in 2000 and 2001, and 2002 was a really crappy year," she said. "So far, 2005 is looking pretty decent but we are still recovering from a hell of a crash."

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