Best in Class: Apple's Balancing Act

It's been called one of the most crushing economic periods in generations. The recession, compounded by the credit crisis, has now lingered halfway into its second year.

The market has taken a beating, but tech has shown remarkable stability despite weak sales and limited access to new cash.

The big pillars of tech like Microsoft (MSFT), Google (GOOG), Apple (AAPL) and Cisco (CSCO), weathered the past year of formidable challenges in good shape. Even though top line growth was challenging in 2008, each outfit posted year-over-year increases in income, staff and even cash piles.

As these players prove, strong balance sheets are the winning defense when sales growth vanishes. For Apple, wealth is an offensive weapon to be used to push new designs and attack growth. But for the other well-to-do tech shops, cost-cutting and cash conservation isn't a fad but a practice that may around for awhile.

You won't see a return to consistent sales growth for several years, says long-time tech watcher Dan Niles co-chief investment officer with Alpha One Capital Partners. Consumer spending will eventually lead the revival, but there's a great deal of adjustment that needs to be made before people can spend freely again, says Niles.

"We've been through a 25-year period of leveraging up. Now we are in an environment where people are worried about their future," says Niles. "The balance sheet of the average consumer is about as bad as the balance sheet of the average bank."