High-Tech Firms Confident About Economy

Leaders of photonics and other high-tech companies see healthy revenue growth for 1999, improving profit margins and strengthening revenues from abroad, according to a report by PricewaterhouseCoopers LLP.

Nearly three-quarters of the executives surveyed said they are optimistic about prospects for the US economy, and 44 percent are optimistic about the global economy. "Pessimism ... has been cut in half since October," PricewaterhouseCoopers noted.

The executives said they expect revenues to grow 24.2 percent in 1999, 6 percent above last year's growth. Small firms expect a larger share of the pie, with a surge of 29.4 percent, compared with just 19 percent for large firms. Large firms, the report says, have greater exposure to uncertain overseas markets, which prompts a more cautious stance.

International revenues for the fourth quarter of 1998 increased for 56 percent of the companies and decreased for only 11 percent. Large businesses are expecting a 34 percent share of total income from abroad in 1999, compared with 20.3 percent for small companies.

Better margins, too

At EG&G Ortec in Oak Ridge, Tenn., which participated in the survey, Jerry Brandon, chief financial officer, shares the confidence about US and global economic prospects. His company, which manufactures instruments, projects revenue growth for 1999 in excess of 5 percent, with 60 percent coming from sales abroad.

Most companies -- 81 percent -- also reported seeing their margins grow or remain steady over the past 12 months. Here again, small firms fared better, with only 14 percent showing a decline in profit margins compared with 24 percent of the large firms. At EG&G Ortec, Brandon said he expects profit margins to increase about 15 percent.

Scarcity of qualified labor is a concern among 62 percent of companies, but only 33 percent reported wage pressure. High-tech executives are budgeting an average 4.6 percent salary increase for hourly workers in 1999. A whopping 75 percent plan to hire this year.

With the strong business and economic climate, more companies are allocating more money for investments in information technology, product development, research, sales promotion and advertising.

The PricewaterhouseCoopers "Technology Barometer" is based on a survey of 385 top executives in the technology industry in both private and publicly held companies.