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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (39195)	7/18/2001 10:34:32 AM
From: stockman_scott	Respond to of 65232

From Morgan Stanley Dean Witter: ________ <<Siebel Systems (SEBL-$40-SB-V) Quarterly Preview - Made it, But it Was Tough Chuck Phillips --We think SEBL had a reasonable qtr and came with in shooting distance of our $300MM in license revenue. We don't expect any upside, and the outlook remains cautious. Although SEBL is executing better than most companies in a difficult buying environment, we think it took another herculean effort to get there, and SEBL is still swimming upstream. --We've heard about several deals (mostly in telecom) that SEBL has been selected for, but most of those are letters of intent (not yet booked) and will take a lot of work to get closed this qtr. While we are encouraged SEBL continues to get selected for these deals, getting them closed is much more unpredictable, even with the design win. --We think the outlook will be cautious. Guidance could go either way based on the last minute input we're getting from our sources. We have $350MM in license revenue for C2Q, but think a range of $310-350MM is a reasonable planning range. There's pipeline activity, but in some ways C2Q was more difficult than C1Q since all the prospects knew by C2Q what was in debate in C1Q - the economy is in a significant downturn. We think SEBL will definitely paint a sobering picture of the economy and the buying environment, and we don't expect any post conference call optimism. --More broadly, input from a dinner we had with CFOs from major US companies suggests that the recovery of the technology buying cycle is still a ways off. We didn't hear anything that suggested they are ready to spend. It sounded more like next year before we see any signs of an improving buying environment. That being the case, and with most companies expecting Q/Q improvements in C2H01, there's a lot of work to do, and we expect more estimate reductions across the sector even for companies that make their numbers this qtr.>>

To: Jim Willie CB who wrote (39195)	7/18/2001 11:06:14 AM
From: stockman_scott	Respond to of 65232

Gartner Says IT Spending Growth to Fall but "Worst Is Over" Section: 02. Today's News. 7/18/01 By Tim Stammers <<Ever the industry's friend, Gartner Group has put a heroic amount of spin on its own gloomy findings that IT spending growth is set to slow dramatically. "Enterprises continue to spend vigorously on IT... The worst of the economic uncertainty is behind us," the Stamford, Connecticut-based researcher said yesterday. The statements were made on the same day that investment bank Merrill Lynch predicted that for US hardware suppliers, the market might not turn around until next year (see separate story). Issuing preliminary findings from a survey of 600 or so very large companies completed between March and June, Gartner has forecast the surprisingly growth rate of 10% for global IT spending this year. Next year, however, it expects growth to tumble to just 6.1%. As well as identifying the beginnings of a market move away from capital expenditure and into systems rental, Gartner justified the contrast between its growth estimate, and software and hardware suppliers' current financial troubles. It said its survey did not cover SME spending, which is likely to have changed quicker than large that of businesses, and that there now is less spending on new IT projects. Talking down the current downturn, Gartner research director Barbara Gomolski said: "There's a tendency to believe that when hardware and software spending declines, the devotion and dedication to IT is down ... but we see no evidence of that." Business has been a lot worse before, she said. "We're not getting harried phone calls from clients saying they need to slice 25% from their budgets. That just isn't happening, but in the Asian financial crisis we did get calls like that from people scurrying to get money out of budgets at a fast clip." Gartner said that 56% of the companies it surveyed, which showed average annual revenues of $2.3bn, forecast that they will spend more on IT this year than last year. The increase was 21.5% average. On the downside, 21% of the companies predicted falling spending this year, with an average decrease of 12.7%. Gomolski said that growth over the last few years has been between 10% and 15%, but didn't elaborate on that statement. "We tend to avoid year-on-year comparisons, because they're not the same sets of respondents," she said, throwing at least some doubt on either the representativeness of the survey sample, or Gartner's faith in the results. Gomolski warned that the researchers' figures "should not be over-interpreted." This is not the first time Gartner has waved the flag for the IT industry. In February, when it predicted an 11.6% IT spending growth for this year, it said spending was holding up despite fears of a slowdown. Although it warned that followers of self-fulfilling prophesies might spoil the party, it added: "Gartner analysts encourage executives to continue spending wisely on technology - the weapon of choice in carving a competitive advantage in today's global business environment." Asked yesterday why IT suppliers are suffering, despite the researcher's growth estimate, Gartner research director Jeremy Gregg said there were three possible reasons. The first reason he gave is that large business spending on major projects such as ERP, CRM or other systems is budgeted over several quarters continues for some considerable time. Gomolski later pointed out to ComputerWire that the software costs of those sort of projects tend to be "spat out fairly early on." Second, the survey did not cover SMEs. "They're feeling the downturn much harder and because they have shorter decision cycles they're probably pulling the reins back harder," he said. Finally, Gregg said that discretionary spending within IT departments has suffered much more than non-discretionary spending and as a result fewer new projects have been started. "We're likely to see a significant shift to the services model. This could be the start of a period of profound change," Gregg said.>>