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" For the last two years, with the economy collapsing all around it, the technology sector and Silicon Valley in particular have proven to be particularly resilient. But that might not be the case forever. Sooner or later, as the economy contracts and everybody cuts spending, the companies that power Silicon Valley--the startups, venture capitalists, banks and big producers of technology--are bound to be affected. &amp;quot;Black Sunday (a week ago) was really a watershed--we&amp;#039;ve crossed a Rubicon,&amp;quot; said Paul Saffo, a Silicon Valley forecaster. &amp;quot;I think it will change everybody&amp;#039;s attitudes about deregulation, toward the landscape of risk and toward all these new-age investments--these derivatives and hedges. &amp;quot;In the short term, people will be risk-averse. In the long term, it will make people get back to the basics,&amp;quot; said Saffo. &amp;quot;We have risk that people can understand--a startup that gets risk capital. They do well if they deliver something of value to the purchaser, not because of a complex mathematical formula living inside a computer.&amp;quot; In Silicon Valley, Wall Street&amp;#039;s problems have fostered widespread uncertainty. The financial contraction hits just as the valley is in the midst of remaking itself into a worldwide center for clean technology, which takes years to develop and requires more capital than the hardware and software startups the valley has produced in the past. The growth of that new sector could be stunted now that capital is harder to get, especially for companies that have already designed products and are ready to build prototypes, said Marc Gottschalk, a partner at Wilson Sonsini Goodrich &amp;amp;amp; Rosati in Palo Alto, who works with clean-tech startups. A biofuels company, he said, needs a sizable chunk of cash to start scaling up plants. &amp;quot;Venture capitalists might think twice about going down that path where they wouldn&amp;#039;t a few months ago.&amp;quot; Business spending Spending on enterprise (business) technology is also slowing, partly because two big purchasers--Merrill Lynch, which was acquired by Bank of America last week, and Lehman Bros., which filed for bankruptcy--are probably not shopping for products. A third, Bear Stearns, was acquired by JPMorgan Chase in May with help from a loan by the Federal Reserve, and a fourth, Morgan Stanley, has its own financial problems stemming from the credit crisis. Last week Forrester Research lowered its prediction for how much technology spending will grow in the United States next year to 6.1 percent, down from 9.4 percent. Gartner said worldwide technology spending will grow 8 percent this year--4.5 percent if you figure in the decline in the value of the dollar--but a big chunk of that spending will come from outside the United States. &amp;quot;What causes nerves among Bay Area CEOs is watching the economies (in Asia and Europe) cool down,&amp;quot; said Brian Brennan, director of member services for the Silicon Valley Leadership Group. Many of Silicon Valley&amp;#039;s biggest companies sell enterprise computing products, such as Hewlett-Packard, Cisco and Intel. Many of the valley&amp;#039;s biggest rivals--who have operations here--also sell to big business. Think IBM, SAP and Microsoft. Some smaller technology producers claim to be doing well despite the shakiness of some customers. Stephanie DiMarco, founder and CEO of Advent Software in San Francisco, which sells specialized software to Wall Street firms, including Lehman, said business is up strongly because Advent&amp;#039;s software makes these companies more efficient so they can cut costs.    RELATED STORIES * FIRST LOOK: Swapping Smokestacks for Stores, Startups Sell CO2 as Green  * TECH WATCH: Algae Startups Confront Promise of Miracle Fuel  * PLUS: For Future of Biofuel, Secret of MPG Ooze Lies With Startups  * GALLERY: Top 10 Early Contenders for the Automotive X Prize  * BREAKDOWN: 7 Next-Gen Biofuels to Drive Beyond Gasoline   (Photograph by Stan Honda/AFP/Getty Images) "^^<http://www.w3.org/2001/XMLSchema#string>
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