Goldman's Latest Tech-Spend Survey Shows Less Optimism

DOW JONES NEWSWIRES | 03-11-03 | Donna Fuscaldo

[Starwind]

Goldman's Latest Tech-Spend Survey Shows Less Optimism

By Donna Fuscaldo of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--Spending on technology gear may finally be stabilizing, but hopes for an actual improvement this year could be premature, according to a survey of technology executives.

In Mid-February, investment company Goldman Sachs polled technology buyers to gauge their views of the information technology spending environment. What the survey found is many executives expect information technology spending to increase 1% in 2003.

While any growth would be viewed favorably given last year's declines, it is still lower than the 2% to 3% growth tech executives were predicting in an earlier survey conducted in the fall.

"Our IT managers' expectations of spending acceleration is pushed out once again," wrote the team of Goldman Sachs analysts in a report. "Near-term, an overwhelming majority of those surveyed indicate that incremental budget tightening is more likely than budget loosening."

For more than two years, the technology sector has been suffering from a protracted slump, made worse by corporate scandals and economic uncertainty. Corporations have been hard pressed to spend on technology and are only willing to plunk down cash on those projects that will give them a quick return on their investments.

While the looming war with Iraq is leading to increased anxiety and uncertainty, Goldman Sachs said it isn't affecting a majority of technology executives' spending plans.

"Only 19% of our respondents believe that an easing or resolution of current geopolitical tensions will help spur IT spending," wrote the analysts. "Although this proportion is not inconsequential, it seems clear that the impact of potential conflict overseas is only a factor on the margin."

So which companies are poised to win in this tough environment? According to Goldman Sachs, top share gainers include Dell Computer Corp. (DELL), International Business Machines Corp. (IBM), Internet Security Systems Inc. (ISSX) and Red Hat Inc. (RHAT). Others who are making inroads include Microsoft Corp. (MSFT), Network Appliance Inc. (NTAP), Oracle Corp. (ORCL), PeopeSoft Inc. (PSFT) and Siebel Systems Inc. (SEBL).

Goldman noted that spending on security and storage networking remains high, while Linux and next-generation software infrastructure are seeing strength.

-By Donna Fuscaldo, Dow Jones Newswires; 201-938-5253; donna.fuscaldo@dowjones.com .

(END) Dow Jones Newswires

03-11-03 1045ET- - 10 45 AM EST 03-11-03

[Starwind]

While the looming war with Iraq is leading to increased anxiety and uncertainty, Goldman Sachs said it isn't affecting a majority of technology executives' spending plans.

i.e. When the war starts/succeeds, don't expect to see IT cap-ex rise.

[Starwind]

Fyi...