Election Section

SAN JOSE – The Silicon Valley’s biggest companies lost more money last year than they earned in the previous eight years combined, according to a newspaper report. 

“There’s not a sector, at least in recent memory, that has collapsed like this,” said Donald Strazsheim, former chief economist at Merrill Lynch. 

The San Jose Mercury News’ annual survey of the 150 largest publicly held companies in the Silicon Valley shed new light on the worst year in the area’s recent history. 

The companies lost a combined $89.8 billion in 2001. Sales plummeted by $55 billion, the first time revenues failed to grow since the survey began in 1985, and 96 of the companies lost money. 

As orders for computers, software and Internet equipment vanished, companies canceled long-term projects, laid off employees and left millions of square feet of office space idle. 

The year’s winners were non-tech companies — especially real-estate companies, who reported the highest operating profit margins. 

Economists and accountants are now trying to figure out how much of the reported losses stem from weak business conditions and how much they reflect temporary but costly mistakes of the 1999-2000 technology bubble. 

Last year’s losses are stuffed with write-offs, restructurings and charges connected with errors such as paying too much for an acquisition. 

To sort out bad economic conditions from bad business decisions, the Mercury News examined the past 10-year history of the area’s top 150 companies from two points of view: net profits and profits from ongoing business operations alone. 

The comparison shows that tech companies were financially stronger last year than the reported losses suggest: Despite the huge collective loss, the top companies earned $8.3 billion in operating profits in 2001. 

The survey also shows that pressure on tech profits and a slowing growth rate had been squeezing companies throughout the late 1990s, well before the sharp drop