April 21, 2008
If This Has Been The Calm, What Happens To Sales During The Storm?
“The Bay Area's largest public companies experienced the calm before the storm in 2007. Amid signs of an impending recession, local companies continued to expand at a moderate pace, one that most other U.S. regions would envy.
The Chronicle 200, [an] annual report on the 200 largest public companies in the Bay Area, demonstrates the economic diversity and health of this region. Despite a national housing slump and credit crunch, most companies still delivered solid financial performances in 2007 - although there are clearly clouds on the horizon for 2008.”
“Some of that resilience can be traced to local companies' strong presence on the world stage. Most of the corporate leaders, especially Silicon Valley companies, have major international sales. The dollar's weakness has fueled the rest of the world's appetite for U.S. products.
The flip side is that many of those companies also have hefty employment rolls overseas, so while their robust global sales boost the bottom line back home, they don't necessarily translate into job growth here.”
First Published: April 21, 2008 7:30 AM
Comments from "Plugged In" Readers
Lucky for us. Better high employment and high prices than no employment and cheap houses.
But I'd really prefer high employment and low house prices. One can always dream.
Posted by: San FronziScheme at April 21, 2008 8:11 AM
Google's impending doom will destroy life as we know it in San Francisco. o. wait.
Posted by: fluj at April 21, 2008 9:38 AM
There's no doom per se coming from Google.
But just like Microsoft and Oracle, their growth will have to stabilize before the next boom cycle. Another way to grow is to merge with smaller entities. In any case, I think they have too much growth factored into the share price. They did a nice comeback last week, though.
Posted by: San FronziScheme at April 21, 2008 11:09 AM
No offense Fonzarelli but you are a relative newcomer. Some (many) of these posters were predicting serious doom and gloom scenarios for Google, in short order.
Posted by: fluj at April 21, 2008 12:47 PM
You know what, I was predicting Amazon's going out of business in 2002, then predicting Google's doom in 2005.
Now, I stopped predicting dooms. Who knows, maybe I was just a couple of hundreds of years too early.
Posted by: John at April 21, 2008 1:05 PM
And here's a good quote from the article:
"Housing affordability is a challenge to our economic competitiveness," Levy said. "Lower housing prices, while painful to people, overall are helpful to the Bay Area by restoring some measure of affordability. You cannot run an economy, even in the Bay Area, with housing prices that are four times the national average. The salaries here are not four times the national average."
Posted by: Dude at April 21, 2008 6:08 PM
If one reads the story, one will see a slight problem calling the SF Bay Area "safe"
But a whopping chunk of the collective sales comes from the top revenue makers. The top five companies by revenue - Chevron, Hewlett-Packard, McKesson, Wells Fargo and Safeway - together raked in $524.1 billion, more than half the collective revenues for the entire list. Add in the next five by revenue - Intel, Cisco, Apple, Oracle and Google - and the total comes to $664.2 billion, fully two-thirds of the 200 companies' overall revenue.
SO let's word it differently
(so pretty diverse, the top 5 companies)
hmmm... I feel like there is a pattern.
please someone remind me, what happens to capex during national recessions?
and what happens to tech spending when capex spending changes?
Posted by: ex SF-er at April 22, 2008 4:55 AM
Where's Bechtel? Is it not top 10 Bay Area? How can that be?
Posted by: fluj at April 22, 2008 9:35 AM
This is for public companies, fluj. Bechtel is still privately owned.
Posted by: Dude at April 23, 2008 10:57 AM
@ex-SF: You haven't heard the latest theories from the Google Industrial Complex. In a recession, you see, "people" will search/click on different things (soup lines, foreclosure specialists, used clothing stores), so the advertising money will simply come from somewhere else.
There is also a theory that more unemployment will
create "social networking shutins" (everyone hanging on facebook/twitter/linked in/youtube looking for work, posting more videos) increasing the value/advertising spend on those networks.
I'm not making this up (how could I?), but it's important to realize there are people who believe this (and are buying property), so until there is a *real recession* don't expect bargains...
Again, use google's relative stock price as your (patented) lazy-person's real-estate indicator.
Posted by: dub dub at April 23, 2008 11:29 AM