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For workers, sky-high dreams collapse with economy

Posted at 10:24 p.m. PDT Sunday, May 20, 2001

High-tech recession built to last

BY MIKE CASSIDY

Mercury News Columnist

The numbers come daily to remind us.Layoffs up. Portfolios down. Power bills up. Venture capital down. Office vacancy up. Earnings down.

Business is terrible. The economy is in trouble.

Sure, the numbers are important. They're vital signs of economic health. But they leave me with a question: What about us? You know, me and you and the rest of those who live their lives in Silicon Valley?

For us, there is a whole different set of indicators. Anxiety up. Morale down. Pessimism up. Trust down. That knot in the stomach. The queasy pining for the good days that left with barely a goodbye. The stark fear that what lies ahead is a digital dust bowl.

For in the end, Silicon Valley is a company town and the company is sick.``We are now in a valley much deeper than any of us anticipated,'' is the way John Chambers, chief of Cisco Systems, recently put it. He and other business leaders who 18 months ago said the sky was the limit now feel along blindly in search of the bottom.

It's a new world for the New Economy. For the past five years, a gilded giddiness was injected into the most mundane human transactions. Even the skeptics, who fought to keep one foot on the ground, found themselves dancing on the ceiling with the wonder of it all.

The New Economy. The economy that could not be knocked down. You barely needed to be present to win. It was success by osmosis for many who strolled the sidelines watching as IPOs exploded, as portfolios grew fat. The glow splashed over, even if the riches didn't.

But as much as the glad gas infused daily life on the way up, gloom has infected everyday life on the way down. Money can buy happiness, and plenty are still plenty rich from the ride up. They're probably not so gloomy. But as national publications write about hip dot-commers seeing layoffs as a ``second Spring Break,'' it's wise to remember that not everybody got rich.

In fact, a relative few did.

The dessert potluck at my daughter's preschool is an upbeat affair. Cake-fueled kids scampering over jungle gyms, swinging from ropes, digging up sand. Parents roll their eyes and sigh, ``Ah, kids.''

Amid the mayhem, I spot Joe Thomson, a dad I met doing schoolyard work in the fall. Joe was a Web producer, a job that sounded so cool that fall workday. `Hey, Joe. How are you?'' I ask at the potluck.

`Unemployed,'' he says. He saw it coming, but late in the game. Major hint: The young company moved back to the founder's garage. Two kids, a Mountain View rent and laid off without severance. Joe is thinking of moving to Portland.

Who's next?

We're living in a foxhole. You don't want to get too close. You never know who they'll cart out next. Yes, unemployment is still low, at 2.6 percent in Santa Clara County. It's a comfort and a confusion: Are those laid off finding new jobs quickly? Are they returning to school? Leaving the valley? Living off the fat of the good times?

Venerable valley companies are cutting jobs by the thousands. Cisco, 8,500. Intel, 5,000. HP, 3,000. 3Com, 3,000. SGI, 1,000. Smaller companies are making cuts, 10 percent, 20 percent, 30 percent. Look at the person on your right. Look at the person on your left. A month from now one of you won't be here.

So much went unexamined on the rise. We put aside the old sayings: What goes up must come down. Nothing good lasts forever. If something looks too good to be true, it probably is.

Now, the shaky times have raised new questions: Why didn't the architects of the New Economy see this coming? Or was it that they knew it would come but figured they'd just cut costs by cutting people? Can employers be trusted? Am I next? Is it time to leave?

It was such a rush, the rocket ride up. We were infatuated. We tried not to go head-over-heels, but man, what was not to like? Cool technology. Staggering pay packages. New cars. New houses. New buzzwords.

Remember when we were going to be the modern Medicis? A cultural Florence would flourish between the Santa Cruz Mountains and the Diablo Range.

Falling short

Now, KQED-FM can't make its $1 million pledge nut. The San Jose Symphony faces a $1.6 million shortfall and a delayed dream for a new concert hall. Palo Alto canceled its Black and White Ball, a fundraiser to build minds and bodies through recreational and cultural programs.

We have gone from virtual reality to harsh reality. Around every corner are reminders of what we had and how it's lost. Remember when companies were paying workers to recruit others to join the high-tech ranks? Now, through buyouts, companies are paying the same workers to just go away.

The skid has been dramatic: Thousands of layoffs in Silicon Valley this year. Trillions in wealth evaporated from the Nasdaq alone. Double-digit percentage increases in power bills. A state budget that is a wreck for the first time in years. Office vacancy up from near nothing on the Peninsula to 15 percent in Mountain View and Redwood City.

There is plenty to worry about, but not everybody worries. Some are simply too optimistic or too rich to worry no matter how many sour earnings reports surface. They're New Economy believers, and we'll need them to fuel the turnaround when the weather clears.

And it will clear, but what good does that do those in danger now? Gerry Stewart remembers the last harsh downturn. She took early retirement from Lockheed in the early 1990s. She opened Mustard's Last Stand, a hot-dog cart that she parks on Ellis Street in Mountain View.

`My husband and I both decided we wanted to do something as far away from high-tech as we could get, and I think this is it.''

Once-prime spot

Stewart moved to Ellis Street months after Netscape celebrated its 1995 initial public stock offering in a building just down the street. The stock was offered at $28 and opened at $71. By the end of the day, fledgling Netscape was a $2.3 billion company and its founders were fabulously rich. The Internet gold rush was on.

Stewart watched as new buildings went up and filled up. And then, last year, the herd started to thin. `I've seen a change in the area,'' Stewart, 61, says. ``People are moving out of these buildings. There are two new buildings over there. I don't think they're going to get any tenants.''

Sales at her red-hot stand are down 10 percent. Costs are up. Mustard's Last Stand, it seems, won't hold. Stewart and her husband plan to move to Nevada in a year, rather than stay and worry about the downturn.

Their departure will leave us with another number to contemplate: one less roadside hot dog cart.

Contact Mike Cassidy at mcassidy@sjmercury.com or (408) 920-5536.

-- Swissrose (cellier3@mindspring.com), May 21, 2001