(By Mayur Pahilajani - iStockAnalyst Writer)New York, NY - Technology may not be one of the favorable sector on a portfolio. But the industry is still buoyant amid the downward drift of the financial sector, according to Microsoft Corp. (MSFT) CEO Steve Ballmer.

Ballmer has expressed optimism about the technology companies in 2009 as the sector is yet to experience the impact of $700 billion bailout plan designed by the U.S. government to rescue the financial industry.

The market analysts on Wall Street have warned that the crisis is not over yet and there may be a substantial reduction in the purchase of technology by the financial firms. They estimate that the tech industry will experience a loss in orders of more than $4 billion from banks as they slash down their IT budgets.

The number of large firms is declining, which will also add up to the order loss of enterprise solutions by the tech vendors. It started with Lehman Brother's filing of bankruptcy; Bank of America's (BAC) acquisition of Merrill Lynch & Co., Inc. (MER); and conversion of the last two independent investment banks Goldman Sachs Group Inc. and Morgan Stanley to bank holding companies. Today the Seattle-based Washington Mutual Inc.'s (WM) collapsed and taken over by JPMorgan Chase & Co. (NYSE: JPM) for $1.9 billion.

In addition, the technology and software vendors including Microsoft have been busy raising capital to avert the potential fallout from the financial subprime contagion, which started almost a year ago. So you have to stay defensive in your stock selection.

Early this week, Microsoft's Board announced a new buyback plan of additional $40 billion in shares in the next five years, after it recently finished a $40 billion stock repurchase program. The company also said it has returned over $115 billion to shareholders through share repurchases and dividends in the past five years.

The world's largest computer marker, Hewlett-Packard Co. (NYSE:HPQ), also announced to repurchase additional $8 billion shares, extending its $3 billion remaining shares. The firm also recently finished repurchasing program of $1.6 billion during its third quarter.

So the large technology firms may not admit their current weakening condition, it is clear that they are engaged in assessing the potential risk, raising capital to shore up their earnings and maintaining their ratings.