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

To: Bill Harmond who wrote (11796)	5/30/2002 12:56:21 PM
From: stockman_scott	Respond to of 57684

IT Spending Slowdown Continues to Hurt Tech Companies, Survey Says By: Karen Talley Dow Jones Newswires Thursday May 30, 11:19 am Eastern Time NEW YORK -- A new survey from Merrill Lynch & Co . (MER) suggests a simple reason for tech stocks' woes: Companies are still not buying the systems companies make. Companies are continuing to cut their technology budgets, spending less on new systems than they expected at the beginning of the year, according to Merrill's survey of U.S. and European chief information officers, the executives who make big buying decisions. In the first quarter, companies delayed projects or took more conservative approaches to tech spending. Companies don't expect to see the traditional pop in end-of-year spending, the survey said. In fact, the more conservative you are the better you might do, said Steve Milunovich, senior technology strategist at Merrill Lynch. "CIOs may get paid for not spending this year," he said. But it should be noted that the responses were mixed. While some CIOs are getting more pessimistic about the spending outlook, others are becoming more upbeat, reflecting a smidgen more optimism than in past surveys. When the companies do begin to spend, their top priority is installing enterprise software systems that help run business operations like accounting and manufacturing. That's good news for systems makers like Oracle Corp. , PeopleSoft Inc. (NasdaqNM: PSFT - News) and SAP AG (NYSE: SAP - News) . Next up is spending on security and disaster recovery systems, software that helps manage customer accounts, software that integrates systems, storage systems and e-commerce programs, the survey said. This matches what CIOs have been saying -- that when spending does pick up, the first order of business will be buying software, followed by server systems, networking systems, service systems and personal computers. CIOs said the top five vendors that are gaining share of the storage system market are the following: EMC Corp. , International Business Machines Corp. (IBM), Hewlett-Packard Co . , Hitachi Ltd. and Sun Microsystems (NasdaqNM: SUNW - News) Inc. ( SUNW). But don't expect that big outlays are being made, or even being planned. When spending does improve, the majority of CIOs say it will be for modest projects.