New Santa Clara University Business Index Shows That Six Months of Pessimism in Silicon Valley has Bottomed Out

Business Wire, Oct 30, 2002

Business Editors

SANTA CLARA, Calif.--(BUSINESS WIRE)--Oct. 30, 2002

New Monthly Survey by SCU Leavey School of Business of

Silicon Valley Managers and Executives Tracks Business

Conditions and Job Availability

A new business index for Silicon Valley released today by Santa Clara University's Leavey School of Business shows that business prospects for the region have leveled out, after a sustained downward slide since March 2002.

The new Santa Clara University Business Index: Silicon Valley Outlook was announced today by business school dean Barry Posner, after a year in development. The survey has been tabulating results since February 2002 to affirm its validity and establish trends, he said.

"This new business indicator, the only one of its kind, is a composite index that every month will track business conditions in Silicon Valley companies and their markets, as well as trends in job availability in the region," said Posner. He said the SCU Business Index will be released the last week of each month.

Results released today showed that the survey respondents -- comprised of SCU MBA alumni in the region -- are now slightly less pessimistic about business conditions in Silicon Valley than last month. This holds steady after a six-month downward trend.

The new SCU Business Index asks managers and executives in a wide range of businesses in Silicon Valley to assess their business prospects for the next six months, and in comparison to the past six months, as well as the current and future availability of jobs in their companies. It is managed for the Leavey School of Business by The Survey Company.

The survey's "forward index" -- rating future business prospects and job growth -- had declined 25 percent from March to September, then rose 3 percent in October. On a scale of 0-100, with 100 being the most optimistic, this indicator had slipped from an optimistic 74.67 in March to a mildly optimistic 55.86 in September. The October indicator was 57.7.

The survey's "backward index," rating business conditions today relative to six months ago, has been pessimistically below a score of 50 since May, the last time the survey showed optimism about current and future economic conditions in Silicon Valley.

The survey results released today showed that Silicon Valley companies' assessment of the health of their customers' business conditions had reached its lowest values of the year in September, then improved slightly in the new data.

"Since much of Silicon Valley's sales reflect infrastructure expenditures by their customers, this decline in customer prospects implies continued reductions in purchases from Silicon Valley suppliers," said SCU economist Kris Mitchener. "The momentum may be shifting, however, because the Business Index shows that Silicon Valley companies' view of the future prospects of their customers has remained essentially unchanged from September to October."

Complete Business Index results and methodology for October and earlier months, can be found at www.surveycompany.com/SCU/SVIndex.html.> About the Santa Clara University Business Index:

The Santa Clara University Business Index survey polls several hundred, MBA alumni and several dozen members of its business advisory board, in managerial and executive positions in Silicon Valley companies. The survey elicits both a backward-looking as well as a forward-looking indicator, thereby capturing the sentiment of the past six months' trend and its counterpart six months into the future. The reported averages of these indicators offer an aggregate summary of business sentiment in the Valley. The indicators range from 0 to 100, centered on 50. Values below 50 imply negative sentiment, and those above 50 imply positive sentiment. A comparison of the backward swing to the forward one reveals the change in sentiment. The survey is conducted every month and over time is meant to develop an early warning system of upswings and downswings in the Silicon Valley economy. Detailed results, profile of respondent samples, and methodology for the index are available at: http://www.surveycompany.com/SCU/SVIndex.html.> MEDIA:

Economists and finance experts at Santa Clara University are available for comment on the SCU Business Index, and the Silicon Valley economy.

Contact SCU Media Relations at 408-396-4491 to arrange interviews with economists Mario Belotti (mbelotti@scu.edu, 408-554-5170), or Kris Mitchener (408-554-4340, kmitchener@scu.edu), or finance professor Robert Hendershott (408-554-4698, rhendershott@scu.edu).

Barry Posner, Dean of the Leavey School of Business (408-554-4523, bposner@scu.edu) is available for comment on the SCU Business Index.

About The Leavey School of Business

The Leavey School of Business at Santa Clara University began in 1926, and was one of the first business schools in the country to receive national accreditation. It undergraduate business program has been recognized as one of the best in California, and it MBA program has been ranked in the nation's top 20 part-time programs. More than 80 percent of its 1,043 MBA students are working professionals in Silicon Valley. For more information, see http://business.scu.edu.