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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: Elwood P. Dowd who wrote (95131)	2/6/2002 5:44:58 PM
From: Night Writer	Read Replies (1) \| Respond to of 97611

YUCK! U.S. tech spending seen flat to down in 2002-survey By Ben Berkowitz LOS ANGELES, Feb 5 (Reuters) - Nearly half of technology managers at major U.S. companies expect high-tech spending to be flat this year compared to 2001, while almost a quarter see it falling, according to a survey presented on Tuesday by brokerage Goldman Sachs. That cautious outlook showed that corporate investment plans for computer systems, software, and storage and security are starting to stabilize after being ratcheted sharply lower in 2001 in response to a developing economic slowdown and amid a global technology slump, the brokerage said at an investment conference it is hosting in La Quinta, California. "Budgets could gradually loosen in the same way that they tightened over the course of 2001 as the economy shows improvement," Goldman Sachs said in the report summarizing the results of its survey of information technology (IT) executives at 100 companies with revenues of at least $1 billion. In the survey, 47 percent of corporate managers said spending on information technology would be flat, while most of the remainder were almost equally divided between forecasting declines and increases. One percent of the respondents said they did not know how IT spending would change this year. In that cautious climate, brand-name technology vendors could be poised to pick up market share, the brokerage said. "More often than not, our respondents cite traditional market leaders as gaining share of their spending in the current environment," Goldman Sachs said. Among the companies mentioned in that category were Microsoft Corp. <MSFT.O>, International Business Machines Corp. <IBM.N>, Cisco Systems Inc. <CSCO.O>, Dell Computer Corp. <DELL.O> and EMC Corp. <EMC.N>. The biggest gainers in computer hardware were seen as Dell and IBM, with 39 percent of surveyed managers and 34 percent, respectively, saying they would get more business. The biggest share losers were expected to be Compaq Computer Corp. <CPQ.N> and Hewlett-Packard Co. <HWP.N> at 40 percent and 32 percent, respectively, the survey said. Almost half of the surveyed managers (49 percent) said their spending on laptop and desktop computers would remain flat in 2002. Some 38 percent of managers said they had lengthened their replacement cycle for personal computers. With regard to software, 50 percent of managers surveyed said they would buy more from Microsoft, while 41 percent said they would increase spending with enterprise software vendor SAP AG <SAPG.DE>. Novell Inc. <NOVL.O>, which sells network software, was seen losing sales, with 26 percent of users saying they would buy less from the Provo, Utah-based company. SPENDING PRIORITIES INFLUENCED BY SEPT. 11 The top five spending priorities for the year were influenced by the hijacking attacks of Sept. 11, Goldman Sachs said, with managers listing security software, data networking, database software, storage software and disaster recovery as key. The lowest priorities for the year included Linux servers and desktop PC upgrades to Microsoft's Windows 2000 and Windows XP operating systems. More than two-thirds of surveyed managers said they had no plans to use the open standards-based Linux operating system in 2002. Only 1 percent of managers said Linux would be their main system for running powerful servers over the next two to three years. Just as last year's survey showed too much confidence in tech spending budgets, this year's result may point to an early excess of caution, the brokerage said. Only about a quarter of managers thought a year ago that their 2001 budgets would be flat, but over 40 percent of companies surveyed ended up with unchanged budgets. Now managers are more pessimistic: 89 percent of respondents predicted that growth in their IT spending would be below 10 percent over the next five years. That was below the 10-13 percent average annual growth in that spending since 1992, the brokerage said. ((Ben Berkowitz, 213-955-6781; fax, 213-622-0056; e-mail, ben.berkowitz@reuters.com)) REUTERS