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Tuesday, 3 April, 2001, 14:42 GMT 15:42 UK
Dot.coms debate survival strategy
Cashing dot.coms BBC
By BBC News Online's technology reporter Mark Ward in Miami

It will be Christmas before the worst is over for technology companies suffering because of stock market indifference and an economic downturn that is making consumers reluctant to sign up for new services.

I feel like one of the last remaining contestants on the reality TV show Survivor

Bob Davis, Terra Lycos
The gloomy prediction was made by experts attending an industry conference in the US debating survival strategies for struggling technology companies.

The conference also revealed how unprecedented the bubble had been and the consequences it is having for all technology companies.

But the news for attendees was not all bad. Those companies that do survive these difficult times are likely to dominate when economies recover and people start spending again.

'It's been brutal'

This week technology companies have been gathering in Miami Beach at Accenture's 13th annual Global Communications Forum to debate what to do now that the bubble has burst.

Among the speakers, there was no doubt about what blew the bubble up.

Charles Phillips, managing director of Morgan Stanley Dean Witter, revealed figures showing that about 70% of the technology venture-capital financing of the last 25 years was given to dot.coms during 1999 and 2000.

This massive influx of cash fuelled the stock market debuts of the huge numbers of net companies. Mr Phillips said that 56% of the technology debuts of the last 21 years took place in the same two-year period.

Now, almost three-quarters of those market debutantes are trading at levels below their initial price and barely 10% are expected to stay in business for any length of time.

"It's been brutal," said Mr Phillips.

Weathering the storm

His sentiment was echoed by Bob Davis, vice chairman of Terra Lycos, who said: " I feel like one of the last remaining contestants on the reality TV show Survivor."

But it is not just dot.coms that are feeling the effects of the fallout. All technology companies are finding it hard to raise money for expansion just as another key development - convergence between TV, phones and the net - takes hold.

Mr Phillips said he expected the reluctance of investors to part with their cash to continue until the end of the year, but after that he expected sentiment to change.

Many speakers on the first day of the conference urged those present to keep the faith with technology and look to it to help them weather this difficult time.

Getting a grip

Mr Phillips said that up to 75% of the revenues of America's biggest companies came through channels such as shops and dealerships that those businesses did not directly control. Using technology to manage these links into the real world could reap benefits for many firms.

"The caveat is that this is very hard to do," he said.

Tom Pike, a managing partner at Accenture in its strategy practice, said making serious use of e-commerce to tie businesses together and make trading more efficient could prove a boon to those looking to cut costs and get a grip on the way their business is run.

He warned: "Those companies that did not invest during the last downturn lost their leadership position in the next upswing."

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