AFTER MONTHS of burying their heads in the desert sand, executives across Silicon Valley have finally admitted that the current economic downturn will affect the tech industry.

Redundancies at online giants such as Ebay are expected to be announced from today onwards - the auction site is looking to make a cut of 1,500 jobs, a full 10 percent of the company's workforce.

Those in the tech sector have repeatedly denied that the impact would be painful with companies such as Google claiming last week that it believes no one will really be that affected - its shares dropping as it spoke.

Even Microsoft's chief executive, Steve Ballmer pretended that everything was going to be OK, claiming that there is still a certain "buoyancy" in the industry. However this was quickly turned around as he admitted on Friday that, "whatever happens economically will certainly affect Microsoft".

Friday proved just how jittery investors are at the moment, as a blog put out on CNN's website claiming Steve Jobs of Apple had suffered a heart attack caused the company's shares to nosedive in a matter of moments.

The report was quickly exposed as a load of old cobblers, and the shares began to rise again to their previous level, but it just goes to show that the majority of traders have their fingers hovering precariously above the panic button.

Yahoo is another company which is paddling in murky waters, its chief exec Jerry Yang sent out an email to employees last week indicating job cuts. Although not confirmed, these cuts look to be almost certain.

However, it's not all bad news. Even though the above companies will be affected, though they don't want to admit it, other tech sectors will remain reasonably stable.

The video games industry is one such sector, as GAME announced only last week that it expects a 12 per cent sales increase this year.

As always, there is the opposite view, which states that online companies will be fine, even if they do experience a rough ride.

Danny Sullivan, editor of SearchEngineLand.com said, "I think someone like Google has more than enough to make it through." µ

L'Inq
The Guardian