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Slowdown in US 'worse than 2001'

Slowdown in US 'worse than 2001'

ICT firms unveil a variety of cost cutting schemes from job cuts to salary freezes.

The US information technology industry finished last week with a flurry of bad news as equipment makers cut forecasts and reports

circulated that Hewlett-Packard, one of the better performers in the

sector, was freezing salaries.

Texas-based AMD led the downgrades with a warning that fourth-quarter

sales would plunge 25 per cent from the $US1.59 billion ($2.46

billion) worth of sales made in its third quarter.

Its cut reflected spreading pain for the semiconductor sector,

highlighted last month when Intel slashed $US1 billion off its

forecasts for its current quarter.

More bad news came from software maker Adobe Systems, which forecast

sales for the quarter ended February would come in between $US800

million and $US850 million, well short of the average $US929 million

that analysts polled by Bloomberg anticipated.

The company also fell short of expectations for the three months to

November 28, reporting revenue of $915 million compared with consensus

analyst forecasts for revenue of $US926.8 million.

HP was reported to have told its 320,000 employees via email that they

would not receive pay increases in its 2009 financial year as it

clamped down on spending, despite its forecast last month of a solid

improvement to full-year net profit.

EMC vice-president of technology alliances Chuck Hollis, who was in

Australia last week to meet with clients, said the impact of the

economic slowdown on the US IT industry was "already widely seen as

worse than 2001".

"It's very steep and deep," Mr Hollis said. "We also had a lot of

bubble IT propositions - companies like consultancies that had made

their living on the periphery - so there's a pretty big seismic shift

going on in the US IT sector."

The shift has precipitated thousands of job cuts in the industry at

companies including AMD, Sun Microsystems, AT&T and Adobe.

Other big names, including Google, have taken a razor to their rosters

of contract workers and unveiled a variety of other cost-cutting

schemes.

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Tags economic crisis

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