There have been many laughably implausible concepts promoted by Wall Street "strategists" and other supposedly knowledgeable "experts" in recent years.
One that immediately springs to mind is the notion of "decoupling." The idea was that even if the U.S. economy -- the world's largest and the single most important market for developing countries that had staked their economic future on an export-led growth -- slowed down, the rest of the world would still be OK. Yeah, right.
Another bogus theory that followed along somewhat similar lines -- which was also promoted by a hyperactive and well-known TV pundit -- was that technology companies -- and their stock prices -- would somehow remain immune to spreading economic woes and the carnage in credit markets. This was despite the fact that the imploding financial services industry, for example, has been one of the sector's largest customer segments. Hmmm.
Anyway, in "Xerox Warns Companies Cutting IT Spending," the Financial Times offers up insights from someone who actually knows what she is talking about that should, in theory, serve as a reality check for those who are paid for their views on financial markets. Will it? You can guess my answer.
An uncertain economic environment is causing companies to take a more sceptical look at new technology investments, says Anne Mulcahy, chairman and chief executive of Xerox, the US documents company.
Her comments, in an interview with the Financial Times, are the latest indication that fallout from the subprime mortgage crisis and concerns about a US economic slowdown could cause companies to rethink spending on big IT projects - a key source of sales growth for technology companies.
"The hurdle rate for making investments has gone up in general," said Ms Mulcahy. "I think what we see in the US is heightened anxiety. We see the financial services industry tightening their belts, and rightfully so, based on the impacts there."
Ms Mulcahy's comments followed a warning in November by John Chambers, chief executive of Cisco Systems, the world's biggest networking company, who said it had experienced "softness" in orders from big US customers. He said Cisco had seen a sharp fall-off in orders by financial services firms - traditionally among the biggest purchasers of IT equipment - many of which have been lumbered with big writedowns triggered by the credit squeeze.
Technology stocks have slumped in recent weeks amid concerns that the sector could be hit by a drop in tech spending. On Friday, the technology-heavy Nasdaq index fell 3.7 per cent, capping a slide that has seen it shed about 10 per cent since it hit a 12-month high in October.
In spite of Ms Mulcahy's bearish outlook, she stressed that Xerox, which on Monday plans to launch a new corporate logo and brand image, was well positioned to weather any storm.
"We used to be a company that served just big customers, but now [we are] very diversified in terms of small and medium-sized customers and government customers," she said. "We have very little concentrated exposure in any industry segment, including financial services."
Since Xerox's brush with bankruptcy in the early 2000s, Ms Mulcahy has cut jobs, outsourced manufacturing and reorientated the business around new, more profitable technologies such as colour printing and document management in an attempt to re-invigorate sales.
The company announced in November that it would restore its quarterly dividend after a six-year hiatus.
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