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
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