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To: Jerry Olson who wrote (1324)	8/13/2002 11:07:37 AM
From: Frederick Langford	Read Replies (2) of 1854

NEW YORK, Aug 13 (Reuters) - Goldman Sachs analyst Rich Sherlund on Tuesday said anemic economic growth expected for 2003 may reduce earnings in the software sector. In a research note, Sherlund said longer-term growth rates for technology companies likely need to be lowered due to the protracted slowdown in information technology spending. Sherlund said tech spending for 2002 will likely be about flat with last year and 2003 will probably see only 3 percent to 5 percent growth, with much of that coming in the second-half of the year. "We believe there is considerable pent-up demand building for IT projects, although getting funding is the constraint. IT budgets are likely to remain constrained by sluggish corporate profits," Sherlund said. There is less urgency for information technology spending then there was in the 1990s. Long-term growth rates for many of the software companies may have to be cut to reflect a more constrained technology spending climate. If the December quarter is a bit better than expected, it may lighten the cloud on investor sentiment, Sherlund said. Results from Oracle Corp.'s <ORCL.O> August quarter may be viewed as a bellwether for the rest of the software sector. If the company's results are in-line with estimates they may be seen as another sign of stabilization of the software business following several quarters of earnings shortfalls and estimate cuts, Sherlund said. Sherlund said he preferred Microsoft Corp. <MSFT.O> in the software sector because it stands to benefit from the deferred revenue buildup over the past year. Any improvement in demand for personal computers would also significantly add to its earnings. Sherlund said Siebel Systems Inc.'s <SEBL.O> rivals, including SAP AG <SAPG.DE>, can work on product functionality while market growth is constrained by information technology budgets. Siebel Systems shares were off 58 cents, or 6.7 percent, at $8.12, and shares of Oracle were off 18 cents, at $9.55. Microsoft shares were up 12 cents, at $48.59. REUTERS

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