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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Ms. X who wrote (8017)	7/23/1999 10:42:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 10921

An interesting story... July 23, 1999 Analysts:Year 2000 Spending Freeze Fear May Be Overblown By MARIA V. GEORGIANIS NEW YORK -- Technology companies may be crying wolf about the year 2000 computer glitch. The so-called Y2K "nuclear winter" that was to freeze corporate technology spending this year might not be as severe as once feared, according to market research firms. Companies may hold off large-scale implementations of unproven products that could thwart their Y2K preparation, but they'll continue to add to existing systems, said Tom Oleson, a Y2K analyst at International Data Corp. Gartner Group Inc., which spawned the fear of a "nuclear winter" in tech spending, has since moderated its views. The Y2K crisis was cited by Microsoft Corp. (MSFT) and Lucent Technologies Inc. (LU) during their second quarter conference calls as a reason for second-half caution. But panic is not necessary. "We're not seeing an across-the-board freeze on technology spending, although there may be segments where spending is lower than historical levels," said Dale Vecchio, a Y2K analyst at Gartner Group. Spending in enterprise resource planning software and mainframe software is "likely to be slowed momentarily" because it could take too long to get these products up-and-running and maintain Y2K compliance, Vecchio said. Indeed, enterprise resource planning software companies, for the most part, have reported slumping software sales and blamed the Y2K issue as a reason for that dropoff. Still, about 62% of North American companies don't expect declines in their technology budgets because of the Y2K bug, according to IDC. And as companies wrap up their Y2K projects, they are boosting spending in other areas. "The whole information systems organization isn't going to stop and twiddle their thumbs the rest of the year," Oleson said. "They're going to start spending." Top budget priorities are enterprise software and the development of an Internet strategy. Both will pull hardware and services spending along, Oleson said. One of the biggest misconceptions about the year 2000 bug was that it would reduce tech spending across the board. Actually, spending is likely to rise substantially for new development, Oleson said. As companies expand their business, they will also modestly increase spending on hardware and software they already use, he said. In the second half, businesses will ramp up spending for new hardware and software technology, even though those products may not be widely installed until after the first quarter, when the Y2K problem will be history, Oleson said. That spending will be driven by the return of computer programmers to new development work as they wrap up their companies' Y2K projects. In the first half, 55% of companies completed their Y2K projects. By the end of the third quarter, some 85% are expected to be finished. By the end of the year, 97% of North American companies are expected to be Y2K compliant. Sun Microsystems Inc. (SUNW) recently downplayed the impact of the Y2K crisis on its business. "Sitting here, you can't help but feel more optimistic," Chief Operating Officer Ed Zander said in a conference call Thursday following the company's earnings release. "I still think we have a lot of unknowns ... (but) we're feeling more in control of the situation."