After reducing their budgets sharply for months, many businesses across the U.S. have stopped slashing information-technology spending, a shift that could stem revenue declines at tech companies, including Hewlett-Packard Co. and Cisco Systems Inc. Spending on computer hardware, software and services used to be one of the fastest growing segments of the economy, increasing 9% in 2006 and 13% in 2007, according to Forrester Research.
But growth in corporate tech spending -- the primary source of revenue for such behemoths as International Business Machines Corp., Dell Inc. and Oracle Corp. -- slowed to 8% in 2008, and it is expected to contract 3% in 2009. The shift toward stability isn't likely to show up when H-P and Dell report quarterly earnings over the next two weeks.
Both companies are expected to announce declines in profit and revenue from a year earlier. But interviews with more than a dozen chief information officers and corporate technology executives who oversee tech spending indicate that a range of U.S. businesses have finished cutting.
The stabilization doesn't mean the good times are back in tech. While spending may have hit a bottom, the executives say they don't intend to boost their budgets again until after their businesses and the economy as a whole have shown stability for several quarters. For 2010, they anticipate tech budgets that are mainly flat.
Source: WSJ
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