Discouraging signs for IT rebound

[Dave Farber <dave () farber net>]

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From: Dewayne Hendricks <dewayne () warpspeed com>



Discouraging signs for IT rebound
By Alorie Gilbert
Staff Writer, CNET News.com
January 2, 2003, 12:42 PM PT
<http://news.com.com/2100-1001-978968.html>

Businesses will remain frugal information technology buyers in 2003,
according to a new survey published Thursday by investment firm
Goldman Sachs.

The survey of 100 chief information officers at leading U.S.
companies indicates that average business spending on computer
hardware and software will decline by 1 percent this year compared
with last year. Goldman Sachs conducted the survey in December, as
most companies finalized their 2003 budgets.

The firm's previous IT outlook survey, conducted in October,
indicated 2 percent to 3 percent growth in corporate computer
purchasing in 2003. In a report issued Thursday, the company called
the decline in sentiment "an unprecedented drop."

"Our latest results indicate a renewed determination among top
management to control expenditures," the Goldman Sachs report stated.

The report said a lack of pent-up demand and new "game changing"
technologies also contributed to the weakened outlook.

The data is an ominous sign for the embattled IT industry, which has
suffered declining sales for more than two years. Pundits and
executives had hoped 2003 would mark a return to growth, albeit
modest, for an industry accustomed to rapid expansion.

Based on the latest Goldman Sachs survey, that's unlikely. The number
of survey respondents that expect to put off higher IT spending until
2004 or later jumped from 26 percent to 43 percent.

The outlook for long-term growth in spending declined to 5 percent
from 6 percent to 7 percent previously.

But the IT industry is getting mixed signals about its near future.
Last month, software industry bellwether Oracle estimated flat to
modestly higher sales in the company's third quarter, reversing six
consecutive quarters of declining sales. Oracle's third quarter ends
in February.

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