There’s a surprising amount of optimism in the Technology, Media and Telecoms (TMT) sector, according to BDO’s latest survey which examines the risks and opportunities for the sector in a downturn.
Undoubtedly, the environment is far tougher now that is was a year ago – many more companies are forecasting a decline in revenues in 2009. But longer term prospects remain good. As one CFO commented “TMT has been damaged, but not terminally”.
From acquisition to innovation...
Interestingly, when compared to last year’s survey results, there has been a significant change in how TMT businesses plan to grow. Last year, growth was all about acquisition, but a year on innovation is the preferred route. 31% say innovation is their top strategy for growth this year, compared with a mere 5% a year ago. Encouragingly, whilst there are planned cuts in many areas of expenditure, 80% of respondents don’t plan to cut their investment in R&D. The survey also points to an increase in strategic partnerships, with more businesses willing to collaborate in order to succeed.
However, the number of TMT businesses that feel they have access to the funding they need to operate effectively has fallen dramatically. 30% of respondents report finding it difficult to access funds - this compares unfavourably with last year, when only 13% said it was difficult. As the economic environment remains tough over the coming months, the tension between the need to maintain R&D expenditure and the lack of external funding will become increasingly critical.
Slim growth this year, but three-year targets remain unchanged...
TMT CFOs are less optimistic about growth rates this year - 40% of CFOs forecast 0-5% growth in the coming year, whilst 16% forecast negative growth (compared to 2% last year). However, the three-year outlook is more positive and growth projections are broadly in line with those set out in last year’s survey – just over a quarter of respondents forecasting growth of over 20%. The confidence in longer term growth reflects a belief that innovation strategies and R&D spending will succeed in driving revenues in 2010 and beyond.
For full copy of the report please contact : Nina Chesterton