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Strategies & Market Trends : The New Economy and its Winners -- Ignore unavailable to you. Want to Upgrade?

To: Wizard who wrote (7948)	7/22/2001 2:27:34 PM
From: techanalyst1	Read Replies (1) \| Respond to of 57684

"The tough part is trying to guess when the recovery actually recovers and then counting back 6 months". ... and figuring in valuations and sentiment as far as stock prices go. What benefit is there to a company to spend now? Um... only on stuff they have to and probably products that increase productivity or reduce costs. What benefit is there to a company to avoid spending now and trying to make their customers "more hungry"? A). Cash preservation B). Maybe better pricing Can it last? Maybe up to a point. How long? If they've got IT spending for the year actually in their budget but not yet spent, I bet they hurry up and spend it during the last quarter. "Use it or lose it" and the fear of next year's budget... "if you didn't even spend X amount this year then you don't need it next year either, so we're cutting your budget". But why should they tip their hand now? Instead... they keep their customers up in the air... "gee I'd like to buy that product. Let me get back to you. Sorry, had to talk to the CFO and CTO and CEO and they're looking into it." And there we have it... "no visibility, but we're hoping we're at a trough and will see a better second half because companies are saying they're probably going to purchase later, but the signed orders aren't quite there yet but we're hopeful. In the meantime, we're controlling our own expenses in case this gets worse. We've never had such a rapid slow down and so we remain cautious." And so it feeds on itself. Companies know that their own earnings are bad and they know that their customers are hurting for sales. They know that they can try to get better prices and they're all afraid to be the first to start spending in case the world economic climate does get worse. The question then becomes... if they do indeed have the money in their budgets (which I don't know they do) and they hurry and spend in the last quarter, "is that a one quarter phenomenon or will it continue into next year"? I kind of think that once we get IT spending rolling again, it will continue, but if we see a big bump in q4 2001, it could delay some sales in q1 2002.... bwdik? So... wizard, if I'm right and they spend by year end (on software anyway, not sure about the stuff that still has too much inventory built up), we're less than 6 months from that time frame now and the lows should be in sometime between now and q3 earnings (a few weeks into q4) when presumably companies would see orders start to uptick or at least more interest and calls coming in from buyers. The strongest will be stronger (with better expense controls in place even if a bit leaner in headcount... but in the long run, that strengthens a company) and the weakest will die or maybe just wither away to the pink sheets in a year or two. TA