Wednesday, August 11, 2004

Turning the corner—down! Tech spending tanks 

Gee, it's too bad the CEOs aren't "optimistic." Not that they'll ever be outsourced:

Technology spending appears to be faltering, judging from cautious comments, rising inventories and a weaker-than-expected sales outlook at Cisco Systems Inc. (CSCO.O: Quote, Profile, Research) , as well as bad news from other technology companies.

"It was not just Cisco. National Semi preannounced weakness in handsets. We saw in the last month or two, software companies preannounced earnings shortfalls. Generally, guidance from a lot of companies are more cautious into the third quarter," said Bear Stearns analyst Wojtek Uzdelewicz.

"There is a major deceleration in technology spending, although (the growth is) still healthy."

"The recovery in spending we thought we were seeing early signs of might not come to fruition," J.P. Morgan analyst Ehud Gelblum said in a research note.

Cisco also said its inventories rose 9 percent from the previous quarter, more than Wall Street had been expecting. Company officials said they were not concerned, but a rise in inventories was one of the first signs of trouble before the telecommunications bubble burst in 2001. Cisco took a $2.2 billion charge in 2001 to write off excess inventory.

Investors see Cisco as a benchmark for corporate and government spending because about 75 percent of its revenue comes from those customers.
(via Reuters)

Oh, man.... I've already been through one Bush tech recession. I have to go through a second one?

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