Lawrence Walsh

Tidal Waves

February 28, 2007

The Dow shed more than 400 points yesterday -- or a little more than 2 percent of its net value -- after a landslide sell-off in the hyper-driven Chinese market. Former Fed chairman Alan Greenspan seems to think the U.S. economy is sliding into a recession (sometime later this year, he predicts). And the government this morning announced the economy grew slower last year than initially estimated, so expect a restatement of economic indicators.

Need for worry? Not if you listen to the solution providers, resellers and integrators that make up the VARBusiness 500.

According to the latest VARBusiness 500 Quarterly survey, the biggest solution providers in the channel overwhelmingly said their top-line revenue and profits were either in line or ahead of expectations. While their outlook for the first quarter of 2007 was more tempered, 47 percent forecast their revenues ahead of the last quarter of 2006 and 24 percent said they would be flat.

Slightly troublesome is 29 percent anticipate revenues dropping below Q4 levels. However, 47 percent of respondents anticipate improved and 40 percent expect level profits in 07Q1.

Probably the best indicator of economic health is staffing intentions. Nearly 84 percent of VARBusiness 500 survey respondents said they were hiring more staff in Q1 to tackle strategic initiatives and handle growth opportunities.

While the stock market correction may fray the nerves of Wall Street analysts, the VARBusiness 500 -- as a reflection of the greater channel community -- shows a resiliency to economic fluctuations. That's not to say the channel is immune to economic shifts or, dare I say, downturns. But these quarterly indicators show the value of building strong business plans, focusing on core competencies and executing on tackling strategic objectives. If these indicators hold true, VARBusiness anticipates another year of strong growth for the VARBusiness 500.

VARBusiness is currently accepting applications for the VARBusiness 500, the definitive list of the biggest North America channel companies. Collectively, the VARBusiness 500 represents more than $350 billion in sales that span all disciplines of the IT community. To submit your company for the VARBusiness 500, complete the online form today.