Measured growth is forecast next year for the twin pillars that drive the county’s technology industry: consumer electronics and corporate technology spending.
“It looks like we are on the path to recovery after a tough 2009,” said Shawn DuBravac, chief economist at the Consumer Electronics Association, an Arlington, Va.-based trade group that represents makers of TVs, DVD players, video game consoles, phones and other products. “Things are looking better than six months ago.”
U.S. consumer electronics sales are seen flat next year at $166 billion, versus $165 billion this year. But that’s welcome news after 2009’s estimated 8% drop.
Consumer electronics are a big driver for Santa Ana-based Ingram Micro Inc., Irvine’s Broadcom Corp., Lake Forest-based Western Digital Corp. and other companies here.
Rather than an across-the-board uptick, newer gadgets such as electronic book readers and netbooks—smaller cousins to laptops—are expected to see growth.
Lower prices on flat TVs and Blu-ray DVD players also are expected to spur sales.
High unemployment and the lingering effects of the economic downturn stand to temper consumer electronics sales.
“Consumers continue to be weighed down by a very bad job market,” DuBravac said. “We see a recovery happening at a slow pace, as is typical in an economy in transition.”
The same holds true for corporations, which are projected to resume modest, selective spending next year.
Global information technology spending is expected to grow 3% from a year earlier to $3.3 trillion in 2010, according to Stamford, Conn.-based market researcher Gartner Inc.
In 2009, corporate technology spending fell 7%.
“The market will not recover to 2008 revenue levels before 2012,” said Peter Sondergaard, Gartner’s head of research.
Several of the county’s tech companies rely solely on corporate spending, including Aliso Viejo-based Quest Software Inc., Irvine’s Epicor Software Corp. and QLogic Corp. of Aliso Viejo.
The debut of Microsoft Corp.’s Windows 7 operating system in October and a rush of new versions of other Microsoft software—including Office, Exchange and SharePoint—are expected to prompt some corporate spending next year.
“With some of these newer technologies, you tend to see enterprise buyers wait and see before they make decisions,” said DuBravac of the Consumer Electronics Association. “As we move into 2010 and things are more fully vetted, I think there is some potential for a Windows 7 effect.”
PERSON TO WATCH: Henry “Nick” Nicholas
Broadcom Corp. founder and former chief executive Henry “Nick” Nicholas is heading for the fight of his life in 2010.
The billionaire faces federal trials for options backdating charges set for February and drug charges set for late 2010.
He’s pleaded not guilty to 21 counts related to a conspiracy to illegally backdate stock options at the Irvine chipmaker and four separate counts of distributing drugs.
It’s likely to be the biggest case here since the trial of former Orange County sheriff Mike Carona in late 2008 and early 2009.
Nicholas, who left Broadcom in 2003, has been preparing for trial by buffing up his public image. His philanthropic work in education and for victim’s rights is set to continue.
He’s amassed a top-notch team of lawyers and consultants. The options trial stands to pit the best defense money can buy against government prosecutors looking for a big conviction in the most high-profile case of options backdating.
—Sarah Tolkoff
COMPANY TO WATCH: Emulex Corp.
Costa Mesa-based Emulex Corp. has “a fire lit under” it, in the words of one analyst.
The maker of electronics for data storage networks has to prove to investors and analysts in 2010 that it is better off on its own after spurning a $912 million offer this year from Irvine’s Broadcom Corp.
“They are running around like crazy, in meetings with investors and analysts,” said Kaushik Roy of Wedbush Morgan Securities LLC in San Francisco. “It was sort of a sleepy company before. But now they are fighting for survival.”
Emulex is making inroads and landing customers with products for a new technology dubbed converged networking. It’s seen as the biggest development in corporate networks in years and is set to play out in the next few years.
The company’s prospects in converged networks were a key reason why Broadcom wanted Emulex—and why Emulex’s management rejected the deal.
Lingering lawsuits from the ordeal also are set to play out in 2010.
—Sarah Tolkoff
