As we approach the turn of the year, the debate about the Y2K problem seems to have abated. Certainly in the developed world, governments and the corporate bosses of both large and small companies seem content that enough has been done to avert any significant problems.

The huge investment in information technology to cope with potential Y2K bug problems in recent years does suggest that the transition into the new millennium will be quite smooth.

However, what is not so clear is whether business spending on information technology will drop sharply in 2000 and beyond.

The US stock market knocked 20 per cent off the share price of IBM recently when it announced that its profits over the next six months could suffer as firms cut back on spending on computers through the Y2K changeover date.

IBM is one of the bell-wethers of the global technology sector and its operations cover both the hardware and software sectors of the computer business. While the share prices of other computer stocks also suffered, it has tended to be companies focused on hardware that suffered most. Those companies which are primarily dependent on software such as Microsoft were relatively unscathed by the IBM profits warning.

The 20 per cent fall in the IBM share price in one day highlights the volatility inherent in the share prices of all computer-related companies. But the fact that the share price of one of the industry giants can be so volatile does put into perspective the gyrations in the share prices of the Irish-based information technology companies. Many of these companies have their main listing on the US Nasdaq stock market.

The table below shows the recent share price performance of three of these companies and highlights just how volatile the share prices can be. The star performer in the recent past has been Baltimore, which can now boast a share price that has almost quadrupled so far this year.

The company specialises in the provision of information security solutions and provides both hardware and software to its customers. The recent experience of both Iona Technologies and Smartforce (formerly CBT) contrasts sharply with Baltimore.

Up to the middle of last year, the share price of CBT had risen to more than $60 (€56) when disappointing sales figures led to a sharp fall in the price to as low as $10. However, since then the company has rehabilitated itself, but the recent change of name to Smartforce and the shift in strategy to the Internet business has caused another sharp fall in the share price.

Another Irish success story, Iona Technologies, has also seen its share price buffeted over the past year. A slippage in sales and cost overruns last year led to a fall in the share price from a high of more than $40 to less than $15. Recent better quarterly results and the announcement that Intel has bought a small stake in the company has enabled the shares to recover back to more than $20.

The experience of these three companies highlights the rollercoaster nature of the share prices of companies in the high-tech sector. This is a function of the early-stage nature of most of these companies and the rapid pace of change inherent in these businesses. However, for those investors who are willing to live with high levels of risk, the potential rewards of investing in the fast-changing high-tech sector are extremely attractive.