Tech Startups Told To Cut Back Spending; Analysts Say Downturn Will Hit Wireless Industry


Now that we are weeks into a financial crisis, not only are the predictions starting to surface on how technology, and specifically wireless will be affected, but actions are starting to be taken. In one of the most alarming examples, GigaOm reports today, that Sequoia Capital, is telling its portfolio companies to buckle down, and illustrated the point by displaying an image of a grave stone with the message R.I.P.: Good Times. Separately, Craig Moffett, an analyst at Sanford C. Bernstein, raised major concerns about communications companies, which are typically considered safe bets in troubled times. He said because of bad credit terms and customers cutting back, AT&T (NYSE: T) and Verizon (NYSE: VZ) will suffer and he cast serious doubts on Sprint (NYSE: S) Nextel, which will need $2 billion beyond the $3 billion it has already secured to complete its WiMax roll-out with Clearwire (NSDQ: CLWR). UPDATE: The stock market closed sharply in the final minutes of trading. The Dow fell 678.91, or 7.3 percent, to 8,579.19 (marking the first time it has been below 9,000 since Aug. 6, 2003), and the tech-heavy Nasdaq fell 95.21, or 5.47 percent, to 1,645.12.

We did our own homework and discovered similar sentiments in the VC community. In a discussion last week with Canaan Partners, which was founded in 1987 and has $3 billion under management, they said they are being more disciplined and are telling their portfolio companies to tighten spending, especially when it comes to marketing budgets. When asked to compare recent events with the early 2000’s, Hrach Simonian, an associate in Canaan’s Menlo Park office, said: “My colleagues said back then they were a little more optimistic than they are now…Back then no one expected it to happen, and now people are a little more prepared for the fact that things aren

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