MarketWatch: For Silicon Valley, this time around could be even worse than the last bust

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Silicon Valley may feel more pain this time
Tech Mecca could take harder hit than during dot-com bust, analysts say

By Benjamin Pimentel, MarketWatch


SAN FRANCISCO (MarketWatch) -- Silicon Valley takes some pride in not being the epicenter of the current downturn, unlike the last bust that was sparked when dot-com startups with shaky foundations crumbled, helping trigger an economic earthquake.

But for the Mecca of the high-tech industry, the pain this time around could be even more excruciating than last time, analysts say.

So far, the stock market has cut the industry some slack. While the tech-heavy Nasdaq Composite Index has plunged more than 40% over the past six months, the index has still not plumbed the depths reached after the dot-com meltdown. The Nasdaq closed at 1,293.80 on Friday -- a six-year low but still well above the 1,140 level it hit in late 2002 following the bursting of the tech bubble.

By contrast, the broader market -- represented by the S&P 500 -- is now at its lowest level in more than 12 years.

But physical signs abound that all is not well in the Valley. Samuel Wilson, an analyst with JMP Securities who lives in the Valley and covers the industry, said the region's economic agony is evident in the growing number of vacant offices and unemployed tech workers. He notes that so many people are leaving the Valley, it has even gotten more expensive to rent U-Haul trucks to get out of town, and much easier to drive on the Bay Area's once notoriously-clogged freeways.

"There's no traffic -- what's the deal with that?" he quipped early Friday morning in a cell phone interview from his car as he was driving through Silicon Valley. ..........(more)

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