Tech's stimulus boost

Technology companies are positioning themselves to profit from stimulus packages around the world.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Jon Fortt, senior writer

SAN FRANCISCO (Fortune) -- Here's one group you won't hear complaining too bitterly about government spending: Tech executives.

They may be deficit hawks when it comes to their own balance sheets, but leaders of the largest technology companies these days are positioning global stimulus packages - including the Obama administration's $787 billion stimulus plan - as a necessary evil. And while they're careful to avoid promoting any particular political ideology, there's a common refrain among them that with the economy in such rough shape and with customers afraid to spend, it's only natural for governments to step up.

Take IBM (IBM, Fortune 500). The company estimates that worldwide, governments so far have committed to spend $3.5 trillion in stimulus dollars. Executives figure a good portion of that money will fund projects like smarter electric grids, improved broadband services and digitized healthcare records - areas where IBM happens to market its technology and expertise.

The company is actively preparing to bid for the work. Big Blue already has employees in dozens of countries scouting out the best stimulus opportunities, and figuring out how the company might fit in. The government push goes all the way to the top: In January IBM CEO Sam Palmisano told the incoming Obama administration he believes $30 billion worth of government spending on the right tech projects could yield jobs for more than 900,000 U.S. workers.

The corporate perspective is perhaps more pragmatic than the partisan back-and-forth in Washington. Several executives say government spending is an important way to speed a recovery, but it's not a long-term solution. "It's going to be the governments who set the table for a recovery," says Bob Samson, general manager of IBM's public sector business. "Once that table is set, the enormous creativity and innovation in the private sector can take hold."

What about charges that big stimulus packages are thinly disguised socialism? "This isn't socialism, it's government's job," Samson says. "In every great economic crisis, that's what governments have done." (While that may be true, it's always been controversial, too. Around the time when Roosevelt made Depression-era plans to expand the highway system, one critic accused him of a power grab that would "Hitlerize what was once democratic self-government.")

IBM will have plenty of competition for government contracts. When Hewlett-Packard (HPQ, Fortune 500) bought outsourcing giant EDS last year, it also inherited a $2.5 billion federal government business. Ann Livermore, executive vice president of Hewlett-Packard's Technology Solutions Group, doesn't expect that kind of business to let up. "We see, over the next couple of years, governments around the world being one of the larger spenders on IT," she says. "We certainly see governments on an international basis spending for services that they think will stimulate the economy and stimulate growth." One hot area in her sights: healthcare data.

Still, executives sounded a note of concern that governments shouldn't get carried away with spending - even if it's on their technology. "It looks like government's the only game in town, but I don't think it's a good game. It's OK for the short term - but government spending has to be paid off in higher taxes," says Joe Tucci, CEO of storage and security company EMC (EMC, Fortune 500).

That said, Tucci sees the logic behind some government stimulus packages. "I do think without the stimulus in the early innings, we'd be in this mess for a much longer time." To top of page

Company Price Change % Change
General Electric Co 8.38 -0.29 -3.34%
Advanced Micro Devic... 30.72 -0.76 -2.41%
Bank of America Corp... 26.72 -0.55 -2.02%
Apple Inc 210.36 0.01 0.00%
Ford Motor Co 8.96 -0.07 -0.78%
Data as of 6:30pm ET
Index Last Change % Change
Dow 25,962.44 -173.35 -0.66%
Nasdaq 7,948.56 -54.25 -0.68%
S&P 500 2,900.51 -23.14 -0.79%
Treasuries 1.56 -0.04 -2.32%
Data as of 7:40pm ET
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.