IT Leaders Eye Economy

Some CEOs are wary that the recovery could stall, but say lessons learned from the dot-com bust will help them if it does.

PORTSMOUTH, N.H. -- The IT economy is vastly improved from the depths of the downturn, but there are concerns that the recovery is stalling in some sectors, executives said at the Future Forward conference here today.

"Our business started picking up at the end of 2003," Mary Puma, CEO of semiconductor equipment firm Axcelis Technologies , said during a panel discussion. "However in the last four to six weeks, we've seen signs of things slowing down."

The semiconductor industry is notoriously cyclical, but Puma is concerned with higher inventories of chips and lower utilization rates at chip factories, which is an industry-wide trend.

In addition, although there's been a flow of business driven by consumer electronics, there is no great new device driving demand.

others on the panel voiced similar concerns, saying that many large IT firms are still making quarterly financial targets by cutting costs rather than increasing sales.

Mike Fabiaschi, CEO of Aprisma, expects the third quarter will be difficult for many enterprise software makers. Aprisma, which makes network management software, is in a better position because it's smaller and more flexible, Fabiaschi said.

Paul Gudonis, CEO of training and conferencing specialist Centra Software, agrees. His company, which competes against Microsoft and WebEx , said Centra's advantage is specialization.

But if the economy does stall, panel members said they will lean on lessons learned from the dot-com bust.

Axcelis' Puma, under orders from a corporate parent to slash costs by approximately $60 million, acknowledged mistakes she made during the semiconductor downturn of the late 1990s.

"We cut back on some of our R&D programs and it was a huge mistake," Puma said. "We caught back up, but it cost more money and effort. I didn't make that mistake the second time in 2001."

George Bell, the former CEO of broadband provider ExciteAtHome, said he learned to be more assertive and trust his own judgment.

Bell, who now runs marketing services firm Upromise, said he wrongly assumed that Ma Bell's venerable managers knew better what to do than he did, having come to IT after a decade in documentary filmmaking. He also said he learned not to rush important decisions.

"You can't fill [important management positions] because of urgency or expediency," Bell said. "It almost always backfires."

Other executives on the panel echoed that response, saying there's no substitute for keeping in close touch with your staff and being sure vision and management styles are complementary.

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