By KATE KILPATRICK
You can’t swing a gato in a Mission coffee shop without hitting a software engineer, interface developer or some other IT expert. And as last week’s trading on Wall Street proved, Bay Area urban techies aren’t immune to recession.
The Dow Jones Industrial Average dropped 6.2 percent for the week, closing at 7365.62—a six-year low—and getting within 79.35 points of the October 2002 dot-com bust.
While technology has fared better than banking, few companies have been immune to the global slowdown, and last week proved that again. Hewlett Packard announced weak first-quarter profits and a poor fiscal outlook for 2009. On that news, shares for the world’s largest PC maker declined nearly 8 percent.
Mission techies working from cafes last week broke from their laptops to contemplate the state of the industry.
“Last time it was the dot-com [sub-sector]—now it’s everybody,” said Daniel Herbert, the CEO of a private development and consulting company with 50 employees in San Francisco and Hong Kong.
The 43-year-old at Ritual Roasters on Valencia said he’s “trying very hard not to reduce the size” of his company, but he’s cut back on spending already by zapping end-of-the-year bonuses.
Two tables away, Arturo Duarte, a 40-year-old software developer, said his company announced layoffs about a month ago, but they’ve yet to say who will go.
“Some people are a little stressed thinking what’s going to be the criteria,” he said. “Will they cut certain branches or [base it on] individual performance?” He also wondered if the recession will provide hi-tech companies an “excuse to get lean, cut corners and save money here and there—even if they’re doing well.”
Doing well has become increasingly relative.
While dodging the life-threatening blows hammering the banking industry, the largest Bay Area tech stocks are on average valued at a little more than half their 52-week high. Hewlett-Packard has fallen 37 percent from its 52-week high, Intel -49 percent, Cisco -46 percent, Apple -53 percent, Oracle -30 percent, Google -42 percent and Sun Microsystems -73 percent.
Still, Hebert thinks the tech sector has a natural advantage: “In tech, because things change so quickly it’s a place where people can be optimistic.” And within the industry—and even within the Bay Area generally—he said, there are “lots of smart, young, energetic people who are capable of doing all sorts of things—they’re very employable.”
No one represents technology’s best and brightest—and most optimistic—better than Google.
Dozens of Google employees who live in the Mission line up alongside the Bethel Christian Church on 24th and Valencia every morning to catch the black and neon green buses that shuttle them the 33 miles to their offices in Mountain View, Cal.
But when a reporter asked the morning commuters how concerned they were about their jobs and industry, they were all tight-lipped, offering refrains such as: “I’d rather not,” “I don’t feel comfortable talking about that,” and—the most-common refusal—flat-out no. (As a publicly traded company, Google hammers into employees the risks of divulging company information. They obeyed.)
Although Google’s shares have dropped from slightly over 600 in May 2008 to 346 on Friday, analysts said the company is weathering the recession well. Considering the massive economic downturn, Google reported relatively strong fourth-quarter earnings and for now seems intent on keeping the perks going.
In addition to the free bus ride to work, for example, Google employees get stock options.
But now many of those stock options are “underwater,” meaning the price at which the employee contracted to buy the shares is higher than their current value.
No matter. Google announced a new plan in January to allow employees to trade their underwater stocks for the same number of new options.
But not everyone in the industry has been so well looked after. Over at the breezy Coffee Bar on the corner of Florida and Mariposa streets, the tech outlook floated between two extremes.
“I’ve had more friends [in the tech industry] laid off in the last eight months than in the previous eight years,” said 28-year-old freelance web designer Jay Sitter. He estimated about 30 friends have lost their job during that period. “My web geek friends are now [working] in clubs doing bartending or security.”
Just five feet from Sitter was 25-year-old Travis Boettcher, who works in the operations department (doing “back-end server stuff”) for a prominent social networking company.
“Personally I’m not that worried because my company has a lot of venture capital so we should be safe for at least a couple years,” Boettcher said.
Boettcher added that he’s seen no change in company spending or morale over the past year, and no perks have been taken away. He still gets three meals a day, free laundry service and an unending supply of snacks including gummy bears and Goldfish crackers.
“I sort of expected as a sign we’re taking things seriously that there’d be some sort of discernible difference,” said Boettcher. “But I haven’t really seen anything.”