ECONOMY

Glimmer of hope for suffering IT sector, unless war continues

Information technology companies are expecting an average 10 percent decline in turnover during the first quarter of 2003. Industry executives say that the following two quarters will be crucial for the sector. Most estimates concur that results will stabilize in the second quarter, unless there is a downturn in the entire economy, induced by a possible prolonged war in Iraq. A negative development for IT firms is that many of the projects of the «Information Society» program, funded through the European Union’s Third Community Support Framework, are not expected to get going before the fall. Meanwhile, many IT companies that are to be involved in the projects are running short of cash. Their executives claim that, while they have already been working on some of the projects, they have not been paid yet because the EU has not yet replied to the request for funds. They give Taxisnet, the program for online submission of income statements and their verification, which is already running but was only recently approved for EU funding, as an example. Sector executives estimate that many of the cash-strapped firms will not make it through the third quarter and may follow the example of electronics retail chain Zachs which folded a few weeks ago. Allegedly, several suppliers have even stopped supplying some of the listed IT firms as the latter cannot pay for their purchases. The same sources say that one listed firm, which entered the Athens Stock Exchange two years ago, is about to suspend payments. Last year’s financial results were also far from brilliant. «When a company such as Altec shows liabilities bigger than its turnover, it shows that the whole sector is in a critical condition,» an executive said. Altec, the company in question, is also burdened by the situation of its subsidiary retail chain, Microland. Another chain, Multirama, owned by the Germanos group, is also in desperate straits, despite a recent cash infusion in the form of a capital increase. Apparently, this was not enough to cover all liabilities. Retailers have also been pushed into a corner by cautious wholesalers, who once accepted payment as late as six months after delivery. Now, they require payment much sooner, if not on the spot. Athanassios Pouliadis, president of the Association of Information Technology and Communications Companies (SEPE), remains optimistic. He claims that the drop in turnover during the first quarter was not as big as companies feared and that most of the big state- and EU-funded projects are under way. He blames the evaluation committees, set up at the EU’s request, for the delays in funding. According to Pouliadis, the General Secretariat for Information Technology at the Ministry of Economy and Finance is putting pressure on the evaluation committees to finish their work on some important projects that have already been tendered. These include a program to electronically link the various ministries and Police OnLine.