Interest rates are low, and the stock market has recovered its composure. So what are technology companies doing? Hustling to land financing, PricewaterhouseCoopers' latest survey of fast-growing companies shows.

"They're hedging their bets," explains Pete Collins, PWC's director of the Trendsetter Barometer survey, which interviewed 448 execs at the end of the third quarter. Half of the respondents were from high-tech companies, who are more exposed to the uncertainty of international market conditions, Collins says. forty-nine percent of high-tech concerns market abroad, compared with 29% of nontech companies. That means cheap competition from Asia and other developing regions, which is keeping their margins under pressure.

Despite this, they're growing fast. High-tech companies project a 29% jump in revenue over the next 12 months, vs. a 22% rise for their nontech counterparts. The upshot: "They're worried about being able to generate growth and fund it though their own cash flow," says Collins, and they're taking advantage of persistently attractive financing conditions.

How are hot high-tech companies seizing financial opportunities? Here's a snapshot:

• Twenty-eight percent increased their credit lines in the third quarter to an average of 16% of composite revenues, from 14% the previous quarter. Nontech companies reduced credit lines, on average, to 7% of revenue, from 8.5% the previous quarter.
• Twenty-eight percent took out bank loans, compared with 27% the previous quarter, and compared with 22% of nontech businesses. Perhaps high-tech company banks are catching on to the increased demand or the risk of international exposure: Despite the generally lower interest rate environment, high-tech companies paid 8.63% on average, compared with 8.58% for the nontech group. But overall, rates were still down. The 448 fast-growth companies paid 62 basis points less in the third quarter than in the second -- and 71 basis points less than in the third quarter of 1997. (A basis point is 100th of a percentage point.)
• High-tech CEOs didn't miss out on the venture-capital boom, either: One quarter of the high-tech respondents plan in the next 12 months to explore private placements of equity or debt, investments from so-called angels (wealthy individuals who invest in startups), or venture capital. Only 8% of their nontech counterparts said they're seeking this kind of financing.

Are high-tech companies being careless to take on more debt if they think margins will weaken? Collins says: "No, they're looking ahead." What's worrying technology execs most is that the lack of financing will constrain their growth. If the current generous credit conditions tighten, they'll be set.

By Julia Lichtblau in New York
julia_lichtblau@businessweek.com

To: FINANCE