The worst of the ill effects of the tech bust are now behind Canada’s ITC sector, according to The Conference Board of Canada. Output in the sector has now surpassed its previous peak. Healthy growth carried over into the first half of 2005, allowing for steady gains in revenues despite a weak pricing environment. Rising revenues have combined with continued efforts at cost control to steadily improve profit margins.
The primary source of weakness for the sector will be a continued lack of pricing power in the telecommunications and the computer and electronic product industries, noted The Conference Board of Canada. Heavy competition between the segments of the telecommunication services industry will limit the pricing power for service providers, though an increasing focus on service instead of price will help to minimize the damage.
ITC sector profits were expected to rise to $6.3 billion in 2005, an increase of $1.3 billion over the previous year.