SAN MATEO, Calif. Because stricter security and a measure of fear are expected to crimp air travel for the foreseeable future, some executives predict videoconferencing will become more popular, pushing up demand for bandwidth and networking gear. But the dramatic falloff in business for the airline industry since last week's terrorist attacks has led to massive layoffs and is but one factor that has sent the stock market this week to three-year lows.
The once near-automatic ability to take a flight will change, prompting a surge in the use of teleconferencing and videoconferencing technology, said Peter Hanley, president of Novellus Systems Inc. (San Jose, Calif.). "The medium that will change the world is broadband videoconferencing, with HDTV-like quality levels," he said.
That could feed demand for advanced networking gear to support greater video traffic, said Bill Ruehle, chief financial officer for Broadcom Corp. (Irvine, Calif.). "That has to increase the demand for communications, so there will be more bandwidth required."
Some analysts said they have already seen increased sales of cellular telephone handsets, which led Charles Boucher, semiconductor analyst for Bear Stearns & Co. Inc. in San Francisco, to upgraded his view of Texas Instruments Inc., which produces chips for those devices.
But overall it has been a dark week on Wall Street. Stocks plummeted again on Thursday (Sept. 20), with the Dow Jones Industrial Average falling 383 points, and the technology-dominated Nasdaq falling 57 points. The markets have fallen steadily since reopening Monday after being closed for four days following last week's terrorist attacks.
The Dow Jones Industrial Average has fallen 12.8 percent since Monday, reaching lows not seen since October 1998. The Nasdaq has dropped almost 10 percent over the same period and has also reached a three-year low.
"What the market hates most is uncertainty, and we've got that in spades," said Ruehle of Broadcom.
Much of that uncertainty relates to concern over future business opportunities. The corporate world is unclear how business conditions will play out for the rest of the year, and several analysts have declared that the U.S. economy has already entered a recession.
Besides the airlines, tech-sector stalwarts Applied Materials Inc. and 3Com Corp. have both announced significant layoffs this week. Many observers expect corporate earnings across the board to be severely impacted this quarter, as consumer confidence has taken a huge hit. However, there is some optimism that the market will rebound soon.
"I still think we are close to the bottom; every time the United States has flexed its muscles in the past the market has seemed to move higher," said Lance Zipper, managing director of equity trading at Brean Murray & Co. "It's just that everybody is so damn nervous now."
With additional reporting by Reuters.