Will meltdown effect domains ?.

[domaingenius]

During the current global financial crisis there wasn't much of a reaction from technology companies. Many seemed happy that this time, unlike in 2001, it wasn't their fault.

There were even a few companies that were able to take advantage of the situation. Microsoft and Intel, both companies flush with cash, actually took on debt - at a whopping two per cent - to buy back shares, which they hope will increase dividends.

But that doesn't mean that the financial meltdown is not going to hit the tech sector in a big way. In tough economic times, many companies cut back their technology budget, basically rendering the industry an economic canary in a coal mine. This isn't 2001 though, and technology is much more deeply rooted in our everyday lives and business dealings. No matter how many banks collapse, Google is still going to be used by millions of people everyday.

However, a number of people in the industry say that companies are not going to be rushing to upgrade or replace systems anytime soon. One story from Bloomberg states that Microsoft and Cisco may lose up to $4.6 billion in orders next year, about a 20 per cent dip from sales in 2008, based on information from Larry Tabb, founder of Tabb Group in New York, which tracks securities firm budgets. According to Gartner, which researches the IT sector, almost 20 per cent of global technology spending comes from the financial sector.

Some companies also think that this is an American problem. Acer, the world's third largest PC manufacturer, isn't predicting any significant impact since a large portion of their sales comes rom Asia and Europe, although there was an acknowledgment that Gateway, an Acer brand that operates also exclusively in the US, could take a hit.

India

Other companies outside the US won't be so lucky though. The Indian tech sector is likely to take a hit, thanks to the decrease in outsourcing. Customers like Lehman Brothers won't be shipping any more work. While reports vary from company to company, about 15 to 20 per cent of outsourcers' revenue comes from the financial sector. Banking call centres in India could also be affected, which will likely mean trouble for Indian-based companies like Infosys Technologies.

Software companies are going to be losing some customers. Over the last week I've talked to a lot of companies about what they are doing to integrate Web 2.0 features into enterprise software. That in itself is being driven by demands from companies to have faster and easier access to their information, but the problem is that most companies say the demand has been coming from the financial sector, and a large portion of that demand has been from mature markets.

Will the financial sector in the US, faced with a $700 billion bailout, really be able or in some cases allowed to invest in software improvements? Using Web 2.0 in business has tremendous potential, but will companies be able to justify it as a necessity?

I don't have the answer. Even Steve Ballmer, the CEO of Microsoft, doesn't have an answer. He wasn't talking specifically about Web 2.0 integration, but when asked how the financial crisis would impact the tech industry, Ballmer summed it nicely. "Nobody knows exactly what's going to happen," he said.

This isn't 2001 though, and technology is much more deeply rooted in our everyday lives and business dealings. No matter how many banks collapse, Google is still going to be used by millions everyday.

DG

 

[Reece]

Most of the tech stocks are down 20-40% over the past 6 months. Seems to be somewhat similar to the dollar decrease I've seen on my domain sales.

That said, I feel much more comfortable being invested in domains than being invested in financial stocks at the moment

 

[Sonny Banks]

Most of the tech stocks are down 20-40% over the past 6 months. Seems to be somewhat similar to the dollar decrease I've seen on my domain sales.

That said, I feel much more comfortable being invested in domains than being invested in financial stocks at the moment

Agree 100%
Domains are the most secure investment in this time of crisis.
It's the perfect time to buy!

 

[DTalk]

Interesting question...

My first reaction to the idea of the financial crisis was that domains would be hit along with other asset classes. And, to some extent, that's true, I think. We're likely to see fewer topline sales - in, say, the high $xxx,xxx, or $x,xxx,xxx range.....And, yes, there may well be softness in the inter-domainer trade prices.


Having said that, the internet will continue to grow exponentially, crisis or not, imo. The internet, itself, isn't an asset - its a facilitation tool common to all - everywhere.....And, domains are the unique internet addresses. Domains are the connectors. Domains are, increasingly, what - and who - we are...as expressed via the internet....And, the internet will continue to grow.


So, imo, domains will essentially sustain core values.....I don't think the 'tech wreck' of 2001 is at all like what's happening now...Technology - and the internet - are deeply embedded in our social, economic, and political structures now....Increasingly, I feel domains will be seen to be safe harbour investments, in one of the few growing entities (the internet), in these difficult times.


Perversely, I'm sensing that money will flow into domain investment, as this crisis unfolds - not away from it.

.

 

[Reece]

Interesting question...

My first reaction to the idea of the financial crisis was that domains would be hit along with other asset classes. And, to some extent, that's true, I think. We're likely to see fewer topline sales - in, say, the high $xxx,xxx, or $x,xxx,xxx range.....And, yes, there may well be softness in the inter-domainer trade prices.


Having said that, the internet will continue to grow exponentially, crisis or not, imo. The internet, itself, isn't an asset - its a facilitation tool common to all - everywhere.....And, domains are the unique internet addresses. Domains are the connectors. Domains are, increasingly, what - and who - we are...as expressed via the internet....And, the internet will continue to grow.


So, imo, domains will essentially sustain core values.....I don't think the 'tech wreck' of 2001 is at all like what's happening now...Technology - and the internet - are deeply embedded in our social, economic, and political structures now....Increasingly, I feel domains will be seen to be safe harbour investments, in one of the few growing entities (the internet), in these difficult times.


Perversely, I'm sensing that money will flow into domain investment, as this crisis unfolds - not away from it.

.

Well said.
The Internet will certainly continue to grow and if domains don't follow suit, it just means they'll be doing some heavy catch-up at a later date like we saw from 2003-2007. Outlook looks good for a long term investor.

 

[mntor]

Will meltdown effect domains ?

Yes. I believe it has already affected and we are feeling the pinch.
As others have stated, this would be a good time to buy if you can afford to.

 

[000]

Most of the tech stocks are down 20-40% over the past 6 months...

Nasdaq Composite IXIC
26-mar-2008 2326.75
26-sep-2008 2183.34
down 6%

Nasdaq Biotech NBI
26-mar-2008 778.68
26-sep-2008 862.28
up 11%

Nasdaq Computer IXK
26-mar-2008 1048.51
26-sep-2008 960.79
down 8%

Nasdaq Telecom IXUT
26-mar-2008 234.12
26-sep-2008 211.97
down 9%

Philadelphia Semiconductor SOXX
26-mar-2008 347.74
26-sep-2008 321.62
down 8%