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Silicon Valley outlook hits 12-month low

Friday, Aug. 6, 2004

SANTA CLARA, Calif. – Aug. 6, 2004 - Silicon Valley business leaders aren’t predicting dramatically improving conditions over the rest of the year, according to a survey conducted in July by Santa Clara University business school faculty. But researchers say that’s not necessarily bad news.

“Although sentiment about the future hit a 12-month low, the survey suggests that business conditions are stabilizing, not deteriorating,” said Robert Hendershott, associate professor of finance at Leavey School of Business at SCU. “The index number itself still suggests a positive outlook,” he said.

“The flip [between the forward index trending down and the backward line trending upwards] was inevitable,” said Hendershott, who holds the Henninger Family Fellowship and serves as academic director for SCU’s Center for Innovation and Entrepreneurship. “The decline is consistent with the NASDAQ's pullback and the overall stock market’s recent flat performance,” he observed, “but this year’s corporate profit gains continue to be strong, and Silicon Valley firms are well positioned for steady, if not spectacular, growth.”

Survey participants were also questioned whether the recent rise in interest rates would have a positive or negative impact on their business and that of their customers. “That’s another piece of good news,” he said. “Survey participants don’t believe that the shift to a rising interest rate environment will be a big factor for the Silicon Valley economy, with 91 percent saying that rising rates will have little or no impact on their business.”

Some survey respondents even see rising rates as a benefit, with the most positive comments coming from 10 percent of the respondents in investment and banking industries.

Since February 2002, the SCU Business Index has asked managers and executives in a wide range of businesses in Silicon Valley to assess their business prospects for the next six months, and compared to the past six months, as well as current and future availability of jobs in their companies. It is managed for the Leavey School of Business by The Survey Company.

Complete SCU Business Index results and methodology for July and earlier months can be found at

Media: Professor of Finance Robert Hendershott is available to comment on survey results and on business conditions in Silicon Valley. Call 408-554-2162 or 408-554-5125 to arrange an interview.

About the Santa Clara University Business Index survey

This monthly business indicator, the only one of its kind for the Silicon Valley region, is a composite index that every month tracks business conditions in Silicon Valley companies and their markets, as well as trends in job availability in the region, by polling the regions executives and managers.

About The Leavey School of Business

The Leavey School of Business at Santa Clara University began in 1926, and was one of the first business schools in the country to receive national accreditation. Its undergraduate business program has been recognized as one of the best in California, and its MBA program is ranked 10th in the nation among part-time graduate programs. More than 80 percent of its 1,100 MBA students are working professionals in Silicon Valley.

About Santa Clara University

Santa Clara University, a comprehensive Jesuit, Catholic university located in California's Silicon Valley, offers its 8,047 students rigorous undergraduate curricula in arts and sciences, business, and engineering, plus master's and law degrees. Distinguished nationally by the third-highest graduation rate among all U.S. master's universities, California’s oldest higher-education institution demonstrates faith-inspired values of ethics and social justice. More information is online at


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