Cautious Mood Prevalent at High-Tech Meet : H&Q; Conference Draws 1,200 Industry Watchers
Looking for bright spots in the technology industry has been such a thankless occupation during the past 18 months that many investors have turned their attention elsewhere.
Even among the 1,200 or so faithful high-tech portfolio managers and analysts attending the 14th annual Hambrecht & Quist Technology Conference here this week, the guarded optimism of the companies making presentations has a ring of familiarity.
That’s why many of the attendees are looking forward to Thursday, when they’ll hear from some smaller, private companies--several of whom are expected to be candidates for initial public stock offerings during the next year to 18 months. Among those are software, network, robotics and mini-supercomputer companies--some suggesting that they have antidotes for the confusion and apprehension among businesses afflicted with a jumble of unconnected computers.
Voice of Caution
But there’s a soberness even in the anticipation of a new round of initial public offerings.
San Francisco-based Hambrecht & Quist, which in 1985 managed or co-managed six venture capital-backed initial public offerings, has put a voice to the caution.
“There is still lots of opportunity for investment,” H&Q; Chairman William Hambrecht told the conference Monday, “but we have to be more careful in separating the wheat from the chaff.”
Hambrecht later told a press conference that he doubts that the long-awaited rebound in the high-technology industry--predicted to become evident later this year--will cause a new flood of venture capital. “The sources of venture capital,” he said, “are getting more careful and selective about where they place their money.”
In fact, he predicted that “the flow of funds into venture capital will decline during the next few years. We have seen a lot of drop-off in the number of start-ups, and there’s still a shakeout going on. I don’t think there’s a lot of money chasing a lot of deals.”
In a panel discussion Tuesday, four investment fund managers echoed the sentiment but said they were encouraged by “more reasonable valuations” of high-technology companies and expected that trend to carry over to future initial public offerings.
The atmosphere at the conference was “muted” optimism, said one money manager, because the investors “know the stories” of the major companies that had addressed them.
Semiconductor makers, including Intel and National Semiconductor, again cited measures that point to an upturn in the second half of this year. Intel, which lost millions, closed four plants and laid off thousands of employees last year, again said it believed that the down cycle bottomed out in this year’s first quarter.
The computer makers, who hope to be a major factor in a pickup in semiconductor orders, are also cautiously looking for an upturn in sales.
Apple Computer Chairman and Chief Executive John Sculley told the conference Monday that after two to three consecutive quarters of achieving higher profits on lower quarter-to-quarter sales, his Cupertino, Calif.-based company will now concentrate on improving revenue.
Sculley’s speech was well attended, but two other distinctly upbeat--and distinctly non-technology--presentations drew more enthusiastic audiences.
At the session conducted by Norman Pattiz, chairman and president of Westwood One, the Culver City-based radio program network, a glitzy video and estimates of 80% profit increases were the draw.
The financial results of another of H&Q;’s non-technology companies, Dreyer’s Grand Ice Cream, also stood out among the battered high-tech figures. But the Oakland-based company offered a sweeter inducement for conference-goers weary of computer-chip woes: chocolate chips.
