Economic crisis hits Silicon Valley

January 22, 2009 7:09:21 PM PST
Until recently, the technology sector was more resilient to the recession than some industries. But painful cuts are hitting Silicon Valley hard and not showing any signs of letting up.

For nearly a decade, Google has been an iconic symbol of growth and prosperity. The Internet search giant joined the real world with quarterly profits falling for the first time ever.

Fourth quarter profits plunged 68 percent from the same period a year ago.

"We don't know how long this period will last. We obviously hope it is short and we're certainly prepared to get through this no problem," said

Other high tech companies are finding it tougher to shrug off the downturn. After laying off 1,500 employees last month, Yahoo! confirmed a salary freeze for remaining workers.

Sun Microsystems started shedding 6,000 people with an initial round of 1,300.

Russell Hancock is President and CEO of Joint Venture Silicon Valley Network. The organization will release its 'State of the Valley' report next month.

"I think we are in for a period of pain, real pain and retrenchment," said Hancock.

Data storage company net app in Sunnyvale also has a hiring freeze in effect but is celebrating some good news.

Net App is definitely on a high with its number one ranking in Fortune Magazine as the best place to work -- unseating Google.

The founder of Net App actually believes this downturn won't be as bad as the tech bust of 2001.

"In some ways I think this one is shallower from our perspective because everybody is going down but not as far as the tech companies crashed last time," said Net App founder David Hitz.

Silicon Valley's more diversified portfolio now includes green tech and alternative energy. Many analysts believe those companies will help lead a turnaround for the valley and the nation.