In November, at an upbeat meeting with an analyst, the chief executive for Canadian telecom-equipment titan Nortel, John Roth, blithely projected that his company would grow at the same healthy clip it had the year before. "The demand from society and from corporations in particular is not going away," he reported.
That same month, Cisco Systems (CSCO)' John Chambers, a CEO who has produced 11 years of steady revenue growth for the network equipment maker, told 500 analysts that he had never been more optimistic. And Hewlett-Packard (HWP)'s Carly Fiorina came out days later with ambitious growth projections of her own.
All of them were dead wrong.
In the past four months, the tech industry has experienced the sharpest business downturn in its history, with the shattered forecasts of company after company in the sector provoking a $3 trillion loss in the total market value of the Nasdaq in just over a year.
The cratering has leveled the industry and slowed the deployment of new of chips, software and Internet gear that was to spur a leap in business productivity and global expansion.
The hubris has been replaced with a deep lack of confidence in earnings projections, with "limited visibility" the new industry buzzword. It means a firm's leaders can't say where their company is going. Why it happened is a story of how blind ambition, terminal optimism and technology hype brought an overconfident industry crashing down to Earth.
Technology companies are not really that different from firms in other industries when it comes to developing products and generating sales projections: They talk to customers and gauge market expectations.
Indeed, as recently as five months ago, technology companies were thought to be better-positioned for even a sharp downturn; after all, they were using new software systems for forecasting demand and preventing dreaded inventories buildup. But nothing could protect them from the intense pressure to improve earnings quarter after quarter.
