Visibility is clear but view is not very pleasant

Downturn, correction, recession, upturn. How in Alan Greenspan's holy name is anyone to know what is going on?

Some informed pundit somewhere can be found to back any of the above perspectives, and heads are spinning. Do you buy or sell, lay off or hire, expand or contract, attend that tech convention or pull your company stand, fly business or economy, throw a product launch party or just send out a press release?

The batch of company results revealed last week didn't help give what the industry now seems to be calling "visibility", which seems to mean clarity about the future. But hey, this has always been a sector where, just as for Humpty Dumpty, words can mean whatever you want them to mean and new terms are coined every day.

My current favourites are "dot-commed" - a verb that means to have been walloped by the downturn (for example, "I'd really like to buy that BMW but my finances have been dotcommed") and "liquidity events", which you might think refers to those overblown dotcom parties of yesteryear but actually describes what happens when a company goes public and turns investment possibility into profit - or at least, did back in 1999.

But how are you supposed to prognosticate from the financial results tea leaves when they seem to be scattered all over the place? Cisco down, IBM up. Sun Microsystems down, Apple up. Siebel down, Intel down but meeting analyst's expectations. Microsoft OK. Interest rates down, Nasdaq up.

Technology company chief executives - you know, the ones driving those big tech ships that are pulling the economy along behind them - admit they are confused. One of the papers here quoted a whole slew of them, and all were iffy about a recovery any time soon, while at the same time claiming they couldn't really see where things were going (that visibility thing).

However, Mr Thomas Siebel, of Siebel Systems, was direct enough last week after his company's results came out. "I don't understand why CEOs continue to say they have poor visibility. We might not like what we see, but we know what we're looking at. We're in a recession."

Maybe. But take a look at what's happening with venture capital, the fuel that has stoked the new economy engine. More is available this first quarter of 2001 than was available in the peak of the boom, the first quarter of 2000. One venture capitalist (VC) told the San Francisco Chronicle: "We think the market is correcting and venture capital will be a very attractive asset again."

This quarter, some $24.4 billion (€21.9 billion) in funds in the U S have been pledged to venture funds, according to VentureWire, which analyses such things. In the same quarter of last year, funds totalled $18.4 billion.

On the one hand, venture funds still have a better return than just about any other kind of investment, an average of about 20 per cent over the past 20 years, says the Chronicle. Even last year, with company values plummeting, venture funds had a 37.6 per cent return. And hold on - in 1999, the margin was 165 per cent (yes, you read that right, it's not a misprint).

On the other hand, I sat next to a self-described "serial entrepreneur" on a flight from Los Angeles to San Jose recently, who told me that he believed those funds appear deceptively large. Most VCs will have committed that cash to second and third-round funding for companies they're already backing, he said.

He should know, I suppose, having gone through the VC process for six or so technology companies (I couldn't help but think how badly the Republic needs the legal and intellectual environment that enables this kind of entrepreneurial energy). Another recent news report claimed that students at this year's annual Stanford University Graduate School of Business conference on Entrepreneurship were told by the VCs that venture capital was going to be hard to come by. So who knows - there's money but they're not giving it out?

The hardest hit group in the middle of this uncertainty are those who do not have a technology or business background but who went into the edges of the tech industry and for the past few years benefited from the boom. Those are primarily the arts and social sciences graduates who learned to design websites or work in sales and public relations. They became project managers or "content" writers or even set up their own dotcom companies.

They're the first to be hit and cut, and they're the truly shell-shocked ones, wondering what they are going to do after earning good salaries at new economy companies - normally a political science or English literature graduate is not looking at a high-earning future, at least in the short run.

Perhaps I'm biased, but I actually think people with such backgrounds have much greater flexibility and possibility, especially in an economic downturn, than many engineers. For one thing, most engineers will always stay engineers, the job they've been trained to do. That can be very rewarding, but also can be a fairly narrow path.

Also, most engineers I know live in fear of being considered old and out of date by their 30s and 40s, afraid their companies will want to hire cheaper young engineers with the latest skills rather than retrain older employees. There's some evidence of this in Silicon Valley and it has fueled the fight by many of the engineering organisations here against the US Government's increases in the numbers of H1B visas it hands out to foreign workers (cheap, short-term labour, cry the groups).

Well, at least three tech employees have safer jobs this week, anyway. Cisco chief executive Mr John Chambers said that he and Cisco chairman Mr John Morgridge will take only $1 in salary this year to spare the jobs of three Cisco employees. Must be pretty high-paid employees if the two's combined remuneration only spares three. But then, I don't have great visibility into all this.

Klillington@irish-times.ie