Tapping the Brakes

As pessimism grows, a new survey shows that revenue targets, anticipated hiring, and investment projections keep shrinking

Most CEOs in the country's fastest-growing businesses are trimming both revenue targets and hiring plans as they survey the 2001 business landscape and see rocky terrain ahead.

Some 41% of CEOs at so-called "trendsetter" companies surveyed regularly by PricewaterhouseCoopers are optimistic about the economy over the next 12 months. That figure, the result of interviews during the first quarter, compares with an optimism rating of 53% at the end of 2000 and 85% at the start of that year.

Companies surveyed now expect revenue growth of 18.9% over the next year, vs. the earlier fourth-quarter expectations of 24.4% growth for the same period. What's slowing even the fastest-growing companies is lack of demand (cited by two-thirds), and tighter profit margins (cited by one-third).


  "We are involved in a sea change," says Steve Hamm, managing partner of middle-market advisory services at PricewaterhouseCoopers, referring to the fact that slow spending has replaced the lack of qualified workers as the No. 1 roadblock to expansion. The survey, which includes 427 companies ranging from $1 million to $50 million in annual revenue, also showed:

-- 64% plan to add workers over the next year, down from 80% in the fourth quarter of 2000.

-- 54% expect to have Internet-related sales in the next year, down from 65% in the previous quarter.

-- 44% plan to make major capital investments in the next 12 months, down from 42% in the last quarter of 2000. Categories where investment is expected to contract most sharply are information technology, new product development, Internet commerce, and research and development.

By Theresa Forsman in New York

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