Reuters: Y2K no major bug for European tech sector

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http://biz.yahoo.com/rf/991025/df.html

Monday October 25, 3:35 am Eastern Time (Rpt)Y2K no major bug for European tech sector By Sara Ledwith, European Technology Correspondent

LONDON, Oct 22 (Reuters) - The sales slowdown that has featured in several earnings reports recently does not mean that the European technology sector faces major problems with the millennium bug, analysts said on Friday.

Computer services giant International Business Machines Corp (NYSE:IBM - news) and European software houses including Baan and SAP cited a slowdown in spending due to Y2K compliance checks in recent downbeat reports.

The bruising that their stocks got might at first suggest that investors who earlier this year had waited in vain for a bearish technology scenario had rediscovered a Y2K monster lurking beneath the bed.

But analysts say that while checks for the date rollover are curbing spending in parts of the information technology chain, the Internet, and the software push it is driving, should offset this overall.

And while Europe is not focused on computer makers as such, they point out that Y2K problems are an easy scapegoat. SHORT-TERM GLITCH

``The important thing is that (any Y2K knock) is definitely going to be short-term,'' said Stephen Minton, senior analyst with International Data Corporation.

The mainframe market -- where IBM's Y2K exposure is most prominent -- is largely flat, but he said growth in the $18 billion European server market should be near six-seven percent annually through 2003, after dipping to five percent this year.

Merrill Lynch said in a research note this week that companies in older-style hardware environments like IBM may have more of a Y2K impact than those active in newer, Internet-driven areas.

``Any major company coming out with an industry indication like that is going to raise people's concerns -- however, you have to remain very selective because each company is individual,'' said Peter Knox, analyst at Commerzbank.

In software, the demand from European companies to equip themselves for electronic commerce and closer customer connections should more than offset Y2K hesitation, Minton said -- but to benefit, companies have to be poised to deliver.

Minton said groups like Baan and SAP are joining a scramble to position themselves in the burgeoning spheres of e-commerce and customer relationship management (CRM), where companies can track and respond to consumer interests shown by their web use.

However he added: ``I think at the moment you couldn't really say any have really made the leap.''

Knox pointed out that with Europe's technology focus centred more on telecoms equipment than computing, the stock sensitivity to Y2K should not be as great as in the United States.

Recent strength in headline European tech plays -- like Ericsson , Nokia , Philips and Alcatel underlines that point.

``It's natural that any vendor which performs badly is going to cite Y2K as a reason -- but there shouldn't be any companies going bankrupt because of Y2K,'' said Minton.

-- Ken Decker (kcdecker@worldnet.att.net), October 25, 1999

Answers

FWIW, Ken, MY company will no doubt be out of business.

We have already had a serious Y2K failure that almost put us out of biz this year at the Jan 1 rollover. An order entered for 2000 returned a date of 1900. That's not so bad, but it froze the system and dumped all the current data. We did have backup, but the program had to be reloaded. We cannot enter a 00 date yet, and the company that made our MRP software doesn't know what went wrong. We cannot afford new software.

In addition, we need to replace 12 PC's with Y2K compliant ones. We can't afford it. Our calibration database will nto accept due dates next year. We need a new machine for just that function, along with new software, but we don't have the cash. We are JIT, both in materials and cash, a $6 million company without sufficient resources to make it.

I am positive that there are legions of companies out there in the same boat. It's going to be crowded.

I have seen and believe,

MFU

-- Man From Uncle 1999 (mfu1999@hotmail.com), October 25, 1999.


Ouch, MFU! Sounds liek you might wanna seek another source of employ REAL quick, say, this week or so. [lol] Just playing the odds I'd expect to see a decent number of small to medium businesses (defined in this case as less than $10 million in revenue per year) get hammered or driven out of business outright by the costs to remediate or replace what they must to stay in operation.

Which can't help the economy, which is rollercoastering badly as it is...

What a nice time to be alive! [manic grin]

-- OddOne (mocklamer_1999@yahoo.com), October 25, 1999.


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