Facing biggest slump since 2002, Silicon Valley firms eye India

WASHINGTON - With major companies in the Silicon Valley suffering the biggest slump since the dot-com bust, some firms are eyeing India and China to recover from the effects of a global economic meltdown.

The total market capitalisation of the leading technology hub’s 150 biggest public companies plunged 32 percent to about $850 billion for the last 12 months ending March 31, the worst decline since 2002, according to an annual survey by the San Jose Mercury News.

The newspaper’s annual Silicon Valley 150 list ranks public companies headquartered in the region on the basis of their worldwide revenues for the most recent available four quarters.

The latest rankings also showed that the combined revenue for Silicon Valley’s top 150 companies grew five percent in 2008, the smallest annual increase since the Internet bubble burst in 2001. The companies’ combined profits fell 52 percent for the year, the worst plunge since 2001.

The new assessment indicated that global recession hit Silicon Valley companies hard in the latter part of 2008, although many had thought earlier they could escape largely unscathed.

But the global markets have not punished all valley companies. For example, Cisco Systems, whose foreign sales accounted for 47 percent of it business, saw overseas sales leap 20 percent - four times faster than its overall sales growth of 5 percent.

Cisco sees the US emerging faster from the downturn than other countries because of the government’s aggressive moves, including the $787 billion stimulus package. It is also gearing its sales efforts to capture stimulus spending elsewhere, from Mexico to China, the newspaper said.

With all of the stimulus packages, we are very much focussed on the public sector, Wim Elfrink, Cisco’s chief globalisation officer, was quoted as saying.

Cisco also has its eye on India, whose economy is not as tied to exports as those of other Asian countries, Elfrink added. The US, India and China - these are our bets, he said.

Google, whose overseas sales have grown from 18 percent of total revenue in 2001 to just over half last year, also basked in a 40 percent surge in international revenue in 2008, compared with a 24 percent gain in the US.

But for world-leading chip maker Intel, whose foreign business accounts for 80 percent of revenue, things went from bad to worse as the year progressed. Foreign sales plunged 20 percent from the third to the fourth quarter, while revenue in the home market dropped 18 percent.

Sun Microsystems, which gets almost two-thirds of its sales overseas, also was bloodied. Its international sales fell 12 percent in the final quarter from the previous year, compared with a 9 percent drop in its US sales.