FT.com / Companies / IT - IT spending forecasts cut on recession fears
Forecasts for global IT spending in 2008 have been cut, as fears of a recession in the US puts the brakes on growth.
Global spending on IT goods and services is expected to grow to just $1,695bn in 2008, a 6 per cent increase on last year, according to Forrester Research, the market research group. This represents a significant slowdown from 12 per cent growth last year.
Only two months ago, Forrester predicted IT spending would grow 9 per cent to $1,7580bn this year, but the group has pared this forecast back after a series of poor reports on the US economy.
These include news last month that the US economy grew at just 0.6 per cent in the fourth quarter, its slowest pace since 2002, and figures this month showing a fall in employment.
“Historically, there has always been a very strong correlation between the economy and technology spending,” said Andrew Bartels, author of the Forrester report.
He added: “Our forecast is premised on a mild recession in the US economy in the first two or three quarters of 2008, caused by a shrinking housing sector and tapped-out consumers reining in their purchases due to higher interest rates, energy costs and consumer debt services. Anecdotally, we are hearing that this is beginning to filter through to chief information officers, and it is clear the level of caution is rising.”
Last week Cisco Systems, a bellwether for the technology industry, said it had seen a rapid slowdown in orders in January.
“The Cisco announcement was coincidental to the revision in our forecasts, but it was confirmation that the slowdown we were expecting is in fact starting to happen,” Mr Bartels said.
IT spending growth in the US, which accounts for about a third of the global total, is expected to slow to 2.8 per cent, from 6.2 per cent growth last year.
Spending in Asia is expected to be about 9 per cent, the strongest region for growth, but still representing a slowdown from 15 per cent growth last year.
In Europe, IT spending growth will fall from 15 per cent last year to 5 per cent.
The hardest-hit sectors will be computer and communications equipment, with software and services seeing stronger growth. Mr Bartels stressed that the technology slowdown would not be as severe as in 2001, when spending actually declined. “The tech sector will still grow marginally better than the overall economy. This is not a technology bust, it is a slowdown in growth,” he said.
Forrester expects growth to accelerate again in 2009, as the economy improves and the release of new software from companies such as SAP and Oracle help kick-start corporate spending.
Copyright The Financial Times Limited 2008
Monday, February 11, 2008
Tuesday, January 15, 2008
FT.com / Companies / IT - IBM results lift cloud over tech sector
FT.com / Companies / IT - IBM results lift cloud over tech sector
IBM results lift cloud over tech sector
By Chris Nuttall in San Francisco
Published: January 14 2008 18:32 | Last updated: January 14 2008 18:32
Technology shares received an unexpected boost on Monday after IBM pre-announced earnings that showed it might defy an expected downturn in corporate tech spending.
IBM said it benefited from a weak dollar and growth in its business overseas in the fourth quarter. It reported earnings per share of $2.80, 24 per cent higher than a year ago. Revenues were 10 per cent higher at $28.9bn, with 6 percentage points coming from currency benefits.
The results were ahead of analysts’ estimates of profits of $2.60 per share on sales of $27.82bn, according to a Thomson Financial poll.
IBM shares rose 5.5 per cent in New York to $103.40, while the Dow and Nasdaq both rose about 1 per cent. Markets in Europe were also boosted by the news, closing higher after a three-day losing streak.
Analysts said IBM’s results had made traders view more positively an earnings season that continues with Intel, the world’s biggest chipmaker, reporting fourth-quarter results on Tuesday.
Sam Palmisano, IBM chief executive, said: “The broad scope of IBM’s global business – led by strong operational performance in Asia, Europe and emerging countries – drove these outstanding results.
“IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position.”
In November, John Chambers, chief executive of Cisco Systems, warned of a “softness” in orders from big US companies, creating fears that technology companies would suffer from corporate belt-tightening in IT spending.
But IBM’s optimistic pre-announcement suggested those with a global business could ride any downturn at home due to the strength of emerging markets.
Analysts remained cautious about its prospects. Goldman Sachs said a strong fourth quarter was largely expected seasonally and provided little clarity for technology spending in the first half of 2008. “We remain cautious for now given the weakening macro backdrop and the potential risk to estimates,” it said.
The software and services company recorded almost $100bn in worldwide revenues in 2007. It reported revenues of $98.8bn, an increase of 8 per cent on 2006, with 4 points accounted for by the weaker dollar.
IBM said full-year earnings per share were $7.18, including 5 cents per share relating to the sale of its Printing Systems Division in the second quarter, for an increase of 18 per cent on 2006.
Copyright The Financial Times Limited 2008
IBM results lift cloud over tech sector
By Chris Nuttall in San Francisco
Published: January 14 2008 18:32 | Last updated: January 14 2008 18:32
Technology shares received an unexpected boost on Monday after IBM pre-announced earnings that showed it might defy an expected downturn in corporate tech spending.
IBM said it benefited from a weak dollar and growth in its business overseas in the fourth quarter. It reported earnings per share of $2.80, 24 per cent higher than a year ago. Revenues were 10 per cent higher at $28.9bn, with 6 percentage points coming from currency benefits.
The results were ahead of analysts’ estimates of profits of $2.60 per share on sales of $27.82bn, according to a Thomson Financial poll.
IBM shares rose 5.5 per cent in New York to $103.40, while the Dow and Nasdaq both rose about 1 per cent. Markets in Europe were also boosted by the news, closing higher after a three-day losing streak.
Analysts said IBM’s results had made traders view more positively an earnings season that continues with Intel, the world’s biggest chipmaker, reporting fourth-quarter results on Tuesday.
Sam Palmisano, IBM chief executive, said: “The broad scope of IBM’s global business – led by strong operational performance in Asia, Europe and emerging countries – drove these outstanding results.
“IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position.”
In November, John Chambers, chief executive of Cisco Systems, warned of a “softness” in orders from big US companies, creating fears that technology companies would suffer from corporate belt-tightening in IT spending.
But IBM’s optimistic pre-announcement suggested those with a global business could ride any downturn at home due to the strength of emerging markets.
Analysts remained cautious about its prospects. Goldman Sachs said a strong fourth quarter was largely expected seasonally and provided little clarity for technology spending in the first half of 2008. “We remain cautious for now given the weakening macro backdrop and the potential risk to estimates,” it said.
The software and services company recorded almost $100bn in worldwide revenues in 2007. It reported revenues of $98.8bn, an increase of 8 per cent on 2006, with 4 points accounted for by the weaker dollar.
IBM said full-year earnings per share were $7.18, including 5 cents per share relating to the sale of its Printing Systems Division in the second quarter, for an increase of 18 per cent on 2006.
Copyright The Financial Times Limited 2008
Monday, January 14, 2008
FT.com / Companies / IT - IBM results lift cloud over tech sector
FT.com / Companies / IT - IBM results lift cloud over tech sector
IBM results lift cloud over tech sector
By Chris Nuttall in San Francisco
Published: January 14 2008 18:32 | Last updated: January 14 2008 18:32
Technology shares received an unexpected boost on Monday after IBM pre-announced earnings that showed it might defy an expected downturn in corporate tech spending.
IBM said it benefited from a weak dollar and growth in its business overseas in the fourth quarter. It reported earnings per share of $2.80, 24 per cent higher than a year ago. Revenues were 10 per cent higher at $28.9bn, with 6 percentage points coming from currency benefits.
The results were ahead of analysts’ estimates of profits of $2.60 per share on sales of $27.82bn, according to a Thomson Financial poll.
IBM shares rose 5.5 per cent in New York to $103.40, while the Dow and Nasdaq both rose about 1 per cent. Markets in Europe were also boosted by the news, closing higher after a three-day losing streak.
Analysts said IBM’s results had made traders view more positively an earnings season that continues with Intel, the world’s biggest chipmaker, reporting fourth-quarter results on Tuesday.
Sam Palmisano, IBM chief executive, said: “The broad scope of IBM’s global business – led by strong operational performance in Asia, Europe and emerging countries – drove these outstanding results.
“IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position.”
In November, John Chambers, chief executive of Cisco Systems, warned of a “softness” in orders from big US companies, creating fears that technology companies would suffer from corporate belt-tightening in IT spending.
But IBM’s optimistic pre-announcement suggested those with a global business could ride any downturn at home due to the strength of emerging markets.
Analysts remained cautious about its prospects. Goldman Sachs said a strong fourth quarter was largely expected seasonally and provided little clarity for technology spending in the first half of 2008. “We remain cautious for now given the weakening macro backdrop and the potential risk to estimates,” it said.
The software and services company recorded almost $100bn in worldwide revenues in 2007. It reported revenues of $98.8bn, an increase of 8 per cent on 2006, with 4 points accounted for by the weaker dollar.
IBM said full-year earnings per share were $7.18, including 5 cents per share relating to the sale of its Printing Systems Division in the second quarter, for an increase of 18 per cent on 2006.
Copyright The Financial Times Limited 2008
IBM results lift cloud over tech sector
By Chris Nuttall in San Francisco
Published: January 14 2008 18:32 | Last updated: January 14 2008 18:32
Technology shares received an unexpected boost on Monday after IBM pre-announced earnings that showed it might defy an expected downturn in corporate tech spending.
IBM said it benefited from a weak dollar and growth in its business overseas in the fourth quarter. It reported earnings per share of $2.80, 24 per cent higher than a year ago. Revenues were 10 per cent higher at $28.9bn, with 6 percentage points coming from currency benefits.
The results were ahead of analysts’ estimates of profits of $2.60 per share on sales of $27.82bn, according to a Thomson Financial poll.
IBM shares rose 5.5 per cent in New York to $103.40, while the Dow and Nasdaq both rose about 1 per cent. Markets in Europe were also boosted by the news, closing higher after a three-day losing streak.
Analysts said IBM’s results had made traders view more positively an earnings season that continues with Intel, the world’s biggest chipmaker, reporting fourth-quarter results on Tuesday.
Sam Palmisano, IBM chief executive, said: “The broad scope of IBM’s global business – led by strong operational performance in Asia, Europe and emerging countries – drove these outstanding results.
“IBM is well-positioned as we begin 2008 as a result of our global business reach, solid recurring revenue stream and strong financial position.”
In November, John Chambers, chief executive of Cisco Systems, warned of a “softness” in orders from big US companies, creating fears that technology companies would suffer from corporate belt-tightening in IT spending.
But IBM’s optimistic pre-announcement suggested those with a global business could ride any downturn at home due to the strength of emerging markets.
Analysts remained cautious about its prospects. Goldman Sachs said a strong fourth quarter was largely expected seasonally and provided little clarity for technology spending in the first half of 2008. “We remain cautious for now given the weakening macro backdrop and the potential risk to estimates,” it said.
The software and services company recorded almost $100bn in worldwide revenues in 2007. It reported revenues of $98.8bn, an increase of 8 per cent on 2006, with 4 points accounted for by the weaker dollar.
IBM said full-year earnings per share were $7.18, including 5 cents per share relating to the sale of its Printing Systems Division in the second quarter, for an increase of 18 per cent on 2006.
Copyright The Financial Times Limited 2008
Tuesday, November 06, 2007
FT.com / Companies / IT - LogicaCMG sees strong growth in Europe
FT.com / Companies / IT - LogicaCMG sees strong growth in Europe
LogicaCMG sees strong growth in Europe
By Alan Cane
Published: November 5 2007 08:51 | Last updated: November 5 2007 08:51
LogicaCMG, the Anglo-Dutch computing services group, said it expected full-year revenue growth for 2007 to be about 3 per cent at constant currency after strong performances in France and the Netherlands offset continuing weakness in the UK and Asia. Last year the company reported full-year revenues of £2.6bn.
In a generally cautious interim statement, the first it has issued under the new reporting requirements, the company predicted that growth in demand for IT services in Europe in 2008 would be broadly comparable with the current year at about 4 to 6 per cent. The Andy Green, a BT executive, takes over as chief executive at the beginning of next year, following the retirement of Martin Read.
The company, which has made a number of controversial acquisitions in the past few years, also said it intended to use the single brand name Logica from next year, a transition that will involve incremental costs of about £5m. The change, it said: “will help us to enhance our brand recognition internationally amongst customers, partners and employees”.
Turnover for the nine months of the year to September 30 was £2.24bn compared with £2.15bn for the comparable period last year, with revenues in the third quarter at £710.5m (£683.4m) representing growth of 4 per cent on a pro forma constant currency basis.
Jim McKenna, interim chief executive, said revenue growth above the market in France, the Netherlands and the Nordic region was partially offset by weaker performances in the UK and in the company’s international business: “In the UK, we remain focused on improving operational performance in our commercial business and were pleased with the return to growth in the energy and utilities sectors in the third quarter,” he said.
Revenues in France were up 17.1 per cent to £136.7m on a pro forma basis. The company said it continued to win new cross selling orders and was awarded an SAP governance and risk compliance project to be delivered out of France and Belgium together with a €7m project for the French postal service.
International revenues, however, were down 3.4 per cent at £74m and the company said it expected broadly similar results in the fourth quarter with some impact on margins compared with last year.
It has now completed a £130m share buyback scheme. It has not seen any material impact on its financial services business from the recent difficulties in the capital markets and the recruitment market remains competitive with high demand for specialist IT skills, the statement said.
Copyright The Financial Times Limited 2007
LogicaCMG sees strong growth in Europe
By Alan Cane
Published: November 5 2007 08:51 | Last updated: November 5 2007 08:51
LogicaCMG, the Anglo-Dutch computing services group, said it expected full-year revenue growth for 2007 to be about 3 per cent at constant currency after strong performances in France and the Netherlands offset continuing weakness in the UK and Asia. Last year the company reported full-year revenues of £2.6bn.
In a generally cautious interim statement, the first it has issued under the new reporting requirements, the company predicted that growth in demand for IT services in Europe in 2008 would be broadly comparable with the current year at about 4 to 6 per cent. The Andy Green, a BT executive, takes over as chief executive at the beginning of next year, following the retirement of Martin Read.
The company, which has made a number of controversial acquisitions in the past few years, also said it intended to use the single brand name Logica from next year, a transition that will involve incremental costs of about £5m. The change, it said: “will help us to enhance our brand recognition internationally amongst customers, partners and employees”.
Turnover for the nine months of the year to September 30 was £2.24bn compared with £2.15bn for the comparable period last year, with revenues in the third quarter at £710.5m (£683.4m) representing growth of 4 per cent on a pro forma constant currency basis.
Jim McKenna, interim chief executive, said revenue growth above the market in France, the Netherlands and the Nordic region was partially offset by weaker performances in the UK and in the company’s international business: “In the UK, we remain focused on improving operational performance in our commercial business and were pleased with the return to growth in the energy and utilities sectors in the third quarter,” he said.
Revenues in France were up 17.1 per cent to £136.7m on a pro forma basis. The company said it continued to win new cross selling orders and was awarded an SAP governance and risk compliance project to be delivered out of France and Belgium together with a €7m project for the French postal service.
International revenues, however, were down 3.4 per cent at £74m and the company said it expected broadly similar results in the fourth quarter with some impact on margins compared with last year.
It has now completed a £130m share buyback scheme. It has not seen any material impact on its financial services business from the recent difficulties in the capital markets and the recruitment market remains competitive with high demand for specialist IT skills, the statement said.
Copyright The Financial Times Limited 2007
Monday, November 05, 2007
FT.com / By sector - Study urges IT valuation rethink
FT.com / By sector - Study urges IT valuation rethink
Study urges IT valuation rethink
By Pan Kwan Yuk in Paris and Philip Stafford in London
Published: November 4 2007 23:52 | Last updated: November 4 2007 23:52
Companies need to dramatically rethink the way they manage and value their information technology assets if they are to extract better returns from these investments, according to a study published on Monday.
Describing IT hardware and software as the “last remaining hidden corporate asset”, the study, commissioned by Micro Focus, a UK software developer, said core IT assets should be valued with the same rigour and discipline as other corporate assets such as brand and goodwill.
Insead, the Paris-based business school that carried out the research, said that while IT now plays a vital role in driving corporate performance, companies have continued to treat their IT not as assets for value creation but as an expense item to be minimised.
“It’s astounding,” said Soumitra Dutta of Insead.
“While firms have long focused on creating value from physical assets such as factory or store space and intangible assets such as brands, IT assets as a vehicle for value creation have remained largely ignored.”
One problem, according to Prof Dutta, is that even though companies spend billions on IT every year, few boardrooms know the value of their hardware and software and the contributions that they make to their business.
In a study released last month, Micro Focus and Insead found that of the 250 chief information officers and chief finance officers surveyed from companies in the US, UK, France, Germany and Italy, fewer than half had tried to value their IT assets, while 60 per cent did not know the worth of their software.
“When it comes to technology, people tend to get lost in jargon and focus on the new and shiny,” said Stephen Kelly, chief executive of Micro Focus. “Very little thought goes into the benefits that result from the new system and almost none to deriving maximum value from it.”
Yet Prof Dutta said that the potential savings for companies who take the time to analyse the value of their software assets could be huge.
“Think of a house,” he says.
“Would you knock down an entire house when what you need is to update the kitchen? No.
“Yet we see companies spending millions of dollars to build a new IT system every other year when, in many cases, what they needed was just to update the existing one.”
One way Prof Dutta says companies can measure the business value of their core IT assets is through conjoint analysis, a statistical technique used in market research in which people make trade-offs across different attributes.
Copyright The Financial Times Limited 2007
Study urges IT valuation rethink
By Pan Kwan Yuk in Paris and Philip Stafford in London
Published: November 4 2007 23:52 | Last updated: November 4 2007 23:52
Companies need to dramatically rethink the way they manage and value their information technology assets if they are to extract better returns from these investments, according to a study published on Monday.
Describing IT hardware and software as the “last remaining hidden corporate asset”, the study, commissioned by Micro Focus, a UK software developer, said core IT assets should be valued with the same rigour and discipline as other corporate assets such as brand and goodwill.
Insead, the Paris-based business school that carried out the research, said that while IT now plays a vital role in driving corporate performance, companies have continued to treat their IT not as assets for value creation but as an expense item to be minimised.
“It’s astounding,” said Soumitra Dutta of Insead.
“While firms have long focused on creating value from physical assets such as factory or store space and intangible assets such as brands, IT assets as a vehicle for value creation have remained largely ignored.”
One problem, according to Prof Dutta, is that even though companies spend billions on IT every year, few boardrooms know the value of their hardware and software and the contributions that they make to their business.
In a study released last month, Micro Focus and Insead found that of the 250 chief information officers and chief finance officers surveyed from companies in the US, UK, France, Germany and Italy, fewer than half had tried to value their IT assets, while 60 per cent did not know the worth of their software.
“When it comes to technology, people tend to get lost in jargon and focus on the new and shiny,” said Stephen Kelly, chief executive of Micro Focus. “Very little thought goes into the benefits that result from the new system and almost none to deriving maximum value from it.”
Yet Prof Dutta said that the potential savings for companies who take the time to analyse the value of their software assets could be huge.
“Think of a house,” he says.
“Would you knock down an entire house when what you need is to update the kitchen? No.
“Yet we see companies spending millions of dollars to build a new IT system every other year when, in many cases, what they needed was just to update the existing one.”
One way Prof Dutta says companies can measure the business value of their core IT assets is through conjoint analysis, a statistical technique used in market research in which people make trade-offs across different attributes.
Copyright The Financial Times Limited 2007
Tuesday, August 14, 2007
Subscribe to:
Comments (Atom)
