Merrill Survey Shows Shift In IT Spending
November 2, 2000
Dow Jones Newswires
Merrill Survey Shows Shift In IT Spending
By DONNA FUSCALDO
Of DOW JONES NEWSWIRES
NEW YORK -- Information technology spending is undergoing a "powerful, fundamental shift," a Merrill Lynch & Co. study has concluded.
Merrill said the survey of 75 pre-qualified telecommunications, dot-com and service provider technology buyers provided strong support for owning shares of Brocade Communications Systems Inc. (BRCD), Network Appliance Inc. (NTAP), and Sun Microsystems Inc. (SUNW), but left it more cautious about the long term outlooks for Hewlett-Packard Co. (HWP), Unisys Corp. (UIS) and International Business Machines Corp. (IBM).
In a research report, Thomas Kraemer, Merrill's hardware analyst, said demand continues to shift to Internet infrastructure "haves" and away from "have nots." Kraemer characterizes the "haves" as product areas with strong demand or with small but accelerating demand. "Network equipment, e-commerce, overall IT spending, databases and application integration get the preponderance of spending growth," wrote the analyst. "NAS, SAN and direct attach storage enjoy the greatest rates of spending acceleration."
The "have nots," said the analyst, are the products with large but decelerating demand or with weak demand that remains small. The "have nots" include mainframes, packaged applications, desktop software, messaging/e-mail software and PCs, said Kraemer. He noted that the survey respondents plan the smallest increases in spending for those areas over the next year and modest if any increase in spending two years from now.
As for the specific companies, Kraemer said the survey results lend strong support to Merrill's view that Sun's software will continue to fuel market share gains and "transform Sun into a key enterprise player."
In Network Appliance's case, Kraemer said the company placed in both the top overall IT and hardware spending categories. He added that Brocade "should enjoy the largest acceleration of any product category over the next two years."
Of the companies Kraemer was cautious about over the long-term, he said IBM is not the leading overall IT company or the leading hardware vendor for telecom, dot-com and service providers. "In overall IT spending it trails Microsoft, Dell and Compaq," said Kraemer.
As for H-P, the analyst said it trails Compaq Computer Corp. (CPQ) and Dell Computer Corp. (DELL) in overall IT spending. It "barely" leads Sun in overall spending and trails Sun in total hardware spending.
In Unisys's case, Kraemer said, "the outlook is not good for Unisys' mainframe business." He said the company continues to lose share, while overall mainframe spending is weakening. He did note that Merrill expects spending on services to remain healthy.
-Donna Fuscaldo, Dow Jones Newswires, 201-938-5253;
donna.fuscaldo@dowjones.com
--------------------------------------------------------------------------------
URL for this Article:
interactive.wsj.com. |
