Never one to waste an idea, Microsoft's founder Bill Gates created something of a stir two weeks ago when he questioned the computer industry's ability to address humanity's gravest problems.

The poorest two billion people urgently needed healthcare, he said - not laptop PCs and with wireless connections to the Internet. Put otherwise, computers are of little use to the starving.

Still, the broodings of the world's richest man seemed a fair distance from more pressing questions facing the IT business, which has been a key driver of the lengthy boom in the US.

Monday's news that profits at the computer and printer maker Hewlett-Packard had missed forecasts by 20 per cent was just the latest in a spate of shocks about the performance of leading IT companies this autumn.

On that day, shares in HewlettPackard, which employs more than 2,000 people the Republic, shed 15 per cent of their value.

Amid weakening growth and fears about future demand for IT products if a "soft landing" fails to materialise in the US, stock values throughout the sector have moved steadily downwards in recent months, albeit with occasional spells of recovery. Few doubted that many start-up firms in the dot.com sector, with no record of profits, were considerably over-valued before a stock market "correction" last April, and some say the dot.coms are still pricey.

Yet the companies now clawing back expectations are bigger, well-established players with global businesses and strong profits.

Many have operations in the Republic, where more than 72,000 people are employed in what the Central Statistics Office describes as "hi-tech" industry.

These firms are the pace-setters in an Irish economic boom characterised by fast growth and strong productivity gains. They are crucial to the State's prospects of maintaining that growth, a point underlined by the Economic and Social Research Institute (ESRI) in a study* published this week.

It said: "Potential problems that might undermine the virtuous circle include vulnerability to international market forces - particularly in specific high-technology sectors - to residual deficiencies, to physical infrastructure, and to a growing shortage of labour."

If the economy's openness - which aids its ability to attract inward investment from large multinationals - has been the backbone of success, that same factor might prove to be its downfall if the flow of investment from a stalling US runs dry.

This is the upshot of global economic interdependence - growth begets growth down the line, but losses inevitably follow losses too. Stock market volatilityis also a feature. Analysts suggest, however, that it would be wrong to interpret a recent spate of warnings and disappointments in the IT business as evidence that a bust is imminent.

They point out that many recent profit warnings refer to slower growth in three-month periods, not losses. Some arise because of external factors, such as the euro's weakness against the dollar - itself due the US's strength over Europe - high oil prices and an atmosphere of rising interest rates. Others are due to once-off internal factors. "The electronic equipment market is worth $1,000 billion and people are breaking it down to Yahoo equals Intel equals all IT companies. It's not helpful," said Mr Luke Collins, a British-based semiconductor analyst with an influential US consultancy, Dataquest.

Mr Daniel Kunstler, a San Franciso-based senior analyst with JP Morgan, described much of the recent volatility as "overhype". "There's no hard evidence of an impending disaster," he said.

"We really have not seen companies come back and say demand is drying up . . . It's hard to point a finger to firm evidence saying `oh my God, it's got so over-extended that we're heading for a big fall'."

This is a view shared by IDA Ireland, which has paid almost £450 million in grants to the 15 largest multinational IT firms based in the Republic.

"If you look at the figures underlying all of this, for the most part what you get is a very successful year but one in which analysts predictions are not being met," its spokesman said.

"To a great extent it's a settling down in stock markets by the hitech sector. The growth is still very, very strong. What's happening is a levelling off, which might not be good for everybody."

But that worries investors, whose long-term confidence is expressed in the money they are willing to pay for shares. Falling stock prices, then, are a telling antidote to reassuring words from companies and their advisers - and there are plenty of examples.

Shares in the computer maker Dell, which employs 6,000 people in Limerick and Bray, Co Wicklow, traded around $25 this week - less than half the rates recorded in July. Dell said in October that it expected slower sales growth this year - i.e. slower than its growth target of 30 per cent.

Predictably, the news sent a ripple throughout the entire tech sector, nudging stock in industry giants such as Intel and Microsoft downwards.

Intel makes processors for Dell and Microsoft supplies its operating systems. Because they supply most major computer makers, they are seen by some as proxies for the entire PC industry. Both have had their own troubles this year too.

Microsoft's quarterly financial results have beaten analysts' predictions. Yet a Federal judge's ruling last April that the firm's promotion of its Web browser product violated competition law in the US triggered a massive sell-off of technology stocks and severe volatility on stock exchanges worldwide.

The company traded this week about $69 - stronger than the mid-October price of about $50 but still far short of the $116 price recorded at the start of the year.

Microsoft employs more than 1,600 people in the Republic. Yet the company's role is more important than those figures might suggest. Exports from its European operations centre in Dublin represent 5.5 per cent of the State's total exports.

Shares in Intel, which employs 3,200 people in Co Kildare and another 1,200 in support firms, traded about $38 on New York's Nasdaq this week; at the end of August its stock was worth more than $74.

The shares lost ground last September after Intel said its third-quarter revenues would grow by only 3 per cent to 5 per cent above its second-quarter tally of $8.3 billion - far behind the 9 per cent to 12 per cent slated earlier. The company cited a fall-off in demand for PCs in Europe, but the result it posted in October actually exceeded its diminished expectations.

The company's spokesman said this week that it had no plans to change strategy at its Leixlip, Co Kildare operation, where it is investing £1.6 billion in a new plant that will employ an additional 1,000 people when complete in 2002.

"When we produced the second quarter [figures], we expected the third quarter to be brilliant and it turned out to be good," he said.

Still, Intel's share has not recovered. Yes, stock market investors can be extremely fickle. But part of Intel's current rating reflects a change in its long-term strategy.

The company, which previously focused on and dominated the PC chip market, aims to provide "building blocks" for networking and broadband Internet systems, and devices to power handheld wireless gadgets.

Growth in these areas is expected to offset falling demand for PCs - which presumably will reach saturation point at some stage in the future. This will have implications for all PC makers. While Intel changes its internal systems to meet this challenge, its performance, like those of all other businesses, will also be determined by the external environment.

No matter how large a company, there are areas beyond its control. Said Mr Kunstler: "The euro is a big issue, particularly as we look into forward quarters. But in terms of local currency demand, we're not hearing the skies falling."

He continued: "I'm focusing on the first quarter of next year. That's when I have a sense that some of these companies will be under very challenging comparisons vis-a-vis their performance last year."

This is when "macro-factors" such as the inflationary impact of high oil prices and, in Europe, a weak euro may impact strongly.

For companies in real crisis, such as Xerox, which reported third-quarter revenue losses of $167 last month, this makes a turnaround more difficult. A review of its business could have serious implications for Xerox's 2,600 staff in the Republic it plans to invest $500 million in Dundalk.

Feeding the hungry is another matter entirely.

* Bust to Boom? The Irish experience of growth and inequality, Eds Brian Nolan, Philip J O'Connor and Christopher T Whelan. Published by Institute of Public Administration. Price £20/ €25.39.