Many financial pundits are trying to predict when the high-tech market will recover.
In my mind, only one date really matters: May 8, 2002. On or around that day,
Cisco Systems will announce results for fiscal Q3 2002.
My preoccupation with that distant date is easily explained. You’ll recall
that Cisco announced its first-ever quarterly loss in May 2001. As Cisco’s
stock plummeted, the economic slowdown spread from Wall Street to Main Street,
U.S.A. But bad financial news also provides one long-term benefit: Cisco’s
awful results from last May should make for an easy earnings comparison once
May 2002 rolls around. (If not, we’re all in deep, deep trouble.)
With all due respect to Microsoft and Intel, Cisco remains my bellwether for
corporate IT spending. Unlike Wintel, virtually all of Cisco’s revenue
comes from businesses and service providers. Until Cisco’s quarterly results
improve, I think many IT consulting firms are in for more pain and belt tightening.
It’s a good bet that many customers won’t make big IT investments
until early next year, due to mounting staff cuts. Nearly 900,000 people lost
their jobs between January and May, according to The Wall Street Journal. The
cuts have left many companies with thousands of idle PCs and servers, and more
network bandwidth than they can possibly consume.
If your Cisco sales are slowing, one option is to focus on application development
and application integration. Fact is, applications are the driving force behind
all IT spending. Everything else in an IT infrastructure–PCs, servers,
printers, switches, routers, storage, and so on–is of little importance
without applications that provide quantifiable return on investment.
That’s where you come in. If you don’t have an application-integration
practice, it’s time to launch one. Get to know companies like BEA Systems,
Great Plains Software, PeopleSoft and Siebel Systems, which have weathered the
economic slowdown better than most technology companies. Also, keep a close
eye on our RFP Showdown section, where Smart Partner readers describe their
own custom applications.
Cisco may spark a tech rally come May 8, 2002. Until then, find some application