Wall Street Beat: IT forecasts slashed

12.12.2008
With CIOs reporting budget revisions, market analysts slashing expectations for tech sector growth, and companies as diverse as Yahoo, Hynix, Texas Instruments and Sony cutting sales forecasts and jobs this week, there is no bottom clearly in sight for IT.

Along with a global slowdown, the U.S. recession is having an effect on technology that is much more profound than what was expected several months ago.

"Our most recent industry checks point to 2009 IT budgets down 10 percent to 20 percent, marking a rapid deterioration from our proprietary survey of 200 CIOs in Sept. '08, which indicated weak 1 percent growth," Citibank said in a report on IT buyers in financial services. Buyers who currently have a grip on how their budgets are shaping up are typically in the financial services arena, Citibank noted in the report, issued Thursday.

Buyers who are not in financial services "have unusually low visibility" into what they'll be able to spend in the first quarter, Citibank noted. "IT buyers we spoke with may defer spending until 2H '09 to protect against further budget cuts," Citibank said.

With the first half of next year looking bleak, Forrester Research on Tuesday revised its 2009 U.S. IT spending forecast down to 1.6 percent annual growth, from its prior projection of 6.1 percent growth.

"Our U.S. tech market forecast now assumes that the ... decline in U.S. real GDP (gross domestic product) in Q3 2008 will accelerate in Q4 2008 and the first half of 2009 before a weak recovery starts in the second half," said Forrester Research Vice President Andrew Bartels in the report.