Is Silicon Valley ready for a comeback?

In its annual report, scheduled to be released Friday, Joint Venture: Silicon Valley Network included some silver linings in its look at the state of the region--findings that could indicate the area has hit bottom and is poised for a comeback.

The organization, which is dedicated to studying trends among Silicon Valley workers and residents, said the region has experienced at least four economic expansion waves--in defense, integrated circuits, computers and the Internet--that have flown high and then contracted.

"But each wave built innovation networks of talent, suppliers and financial service providers that helped make the next technology wave possible," researchers wrote in an optimistic note on the region's future.

Not surprisingly, Silicon Valley, which is home to major technology companies including Intel and Yahoo, has suffered more than its share of job losses as dot-coms have gone bust and other technology companies have cut staff to make up for overextending themselves in recent years.

According to the report, the region lost 25,000 jobs, or 1.8 percent of its work force, during 2001, and wages fell for the first time in nine years.

What's more, the amount of available commercial real estate is at the highest it's been in nine years, a sharp turnaround from previous years when some companies in fierce competition for office space offered landlords stock options. And possibly worst of all, venture capital funding--the engine that fueled much of the expansion in the late 1990s--tumbled to $6 billion in 2001, down from a high of $21 billion in 2000.

But the study painted a somewhat rosy picture for the future, based upon productivity gains and patent activity. The study found that productivity jumped 4.6 percent during the year. Patent awards--considered by some a measure of a region's innovative spirit--also have jumped in the Silicon Valley during the last decade. Although the region comprises only 1 percent of the nation's population, residents were awarded 8 percent of all U.S. patents in 1999, up from 3 percent in 1990.

A state job report released last week also may show that the tech slump has bottomed out. The area's unemployment rate dropped to 6.1 percent in December, down from 6.6 percent the prior month. And although wages dropped slightly in 2001, they had skyrocketed the year before, growing 22 percent in 2000.

The study's findings on lifestyle issues were somewhat mixed: Housing and traffic problems have grown, but Silicon Valley has made significant gains in public transit. The percentage of new housing units near transportation systems nearly doubled from the year before.