But the company wasn't planning to continue that buying binge, because "a lot of the hard stuff has already been put into place," says Anne-Marie Keane, VP of b-to-b e-commerce.
Reality hit the industry hard by December as companies prepared pre-announcements that would bring the world's most dramatic rise of industry and wealth to an end.
As market researchers adjust to the sobering reality of a deep downturn, lower expectations are emerging. In mid-March, analysts from Gartner Group chopped back an ambitious forecast for transactions that will flow over the Internet by 2004. Transactions should now total $6 trillion instead of the $7.3 trillion Gartner projected in January 2000.
"It was a big party," says Agilent's Barnholt. "The bigger the party, the bigger the hangover."
So why was the industry caught off guard? After all, high-tech firms are supposed to know all about technology and how to use it to predict what's around the corner. Surely they should have been able to see the warning signs within their factories, warehouses and sales ledgers. In June, chip factories saw chip-testing equipment operating at more than 97 percent of capacity, says G. Dan Hutcheson, president of VLSI Research, a market research firm. By August, that number had fallen to 91.4 percent, a clear indication of idle machines. By October, chip prices had fallen 9 percent, Hutcheson says, foreshadowing slowing demand.
In public, executives maintained their bullish outlooks. And in private, companies such as Cisco were reluctant - and late - to tell suppliers to slow shipments and manufacturers to idle assembly lines.
Their unwillingness to admit to lower forecasts caught distributors by surprise. Suddenly truckloads of components and circuit boards started coming back marked "return." In response, distributors began charging restocking fees to offset lost revenue, costing tech firms millions of dollars.
These problems were supposed to be solved by the companies' newly installed software systems. But the products didn't live up to expectations - an ironic twist given their high-tech owners. The systems were supposed to link suppliers, vendors and customers in a continuous data network, so a canceled customer order would slow component purchases throughout the supply chain. The goal was to make it possible for companies to catch changes in demand and prevent the buildup of inventory.
