Feeds

FT forgets law of small numbers in tech collapse scenario

No spike in titsupometer

Security for virtualized datacentres

The number of UK technology firms suffering financial problems was up 371 per cent for the second quarter of 2008 compared to last year.

But the findings are all relative, according to research analyst Martin Kelway from insolvency specialist Begbies Traynor.

When the numbers are put in context, the results showed that the construction sector is in a much more precarious financial position than the IT industry.

Some 4,258 companies faced winding-up petitions from creditors or county court judgments in the second quarter of 2008 compared with 542 businesses in the same period last year.

Kelway pointed out that just 89 IT firms received serious adverse actions in the second quarter of this year, as opposed to 503 construction companies.

Despite these figures, the Financial Times yesterday somewhat misleadingly leapt on the IT sector as registering “the biggest jump in distressed positions”. It based its conclusions on percentage increases - but using a very small number of actual companies.

The IT industry notched up a 371 per cent rise, while construction climbed 370 per cent - but these increases were based on just 89 IT firms compared to 503 construction firms.

The newspaper’s report prompted Kelway to tell The Register that the FT “was quite wrong in suggesting that IT ‘saw the largest rise in the number [his italics] of troubled companies’.” He said that a “very small number of IT firms had been affected” compared to other sectors that have started to feel the pinch.

The Red Flag A!ert survey found that financial services (up 36 per cent), property firms (up 20 per cent) and retail (up 20 per cent) were the three sectors most dramatically affected between the first and second quarters of 2008, due to tightening credit conditions and a sharp dip in consumer confidence.

Meanwhile, other sectors also faced a rise in critical financial problems brought on by worsening economic conditions. Transport and communications Q2 was up 17 per cent on Q1, while the printing and packaging industry rose 13 per cent.

Begbies Traynor said the figures “indicate a deepening credit crunch and potentially more prolonged hardship, for companies facing financial stress, than had been imagined at the outset of 2008”.

The survey measured “corporate distress signals” for incorporated companies that have been trading for over a year and carry assets in excess of £10,000, using information from the British Chamber of Commerce and the Bank of England.

Results from the survey reveal a worrying and significant jump overall, but it also shows that the UK's IT sector is yet to feel the pain of the credit crunch which is already hitting retail, property services and the construction industry. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.