Newspaper article THE JOURNAL RECORD

Expectations for Technology Recovery Keep Getting Pushed Back

Newspaper article THE JOURNAL RECORD

Expectations for Technology Recovery Keep Getting Pushed Back

Article excerpt

SAN JOSE, Calif. -- When the dust cleared last year from the dot- com meltdown, many in the technology industry hoped for recovery by now. Later, with indicators still flagging, the talk was of a late 2002 rebound.

But here at the half-year mark, with earnings warnings from the likes of Intel, Apple Computer and Oracle, the tech sector might soon be adopting the attitude of baseball fans whose teams drop out of the pennant race: Wait `til next year.

Investors certainly are pessimistic. The tech-heavy Nasdaq Stock Market index fell to its lowest level of the year Thursday is down 25 percent in 2002.

The reasons are clear. Many corporations are getting by without upgrading their existing technology, especially computers and other hardware.

The businesses that are making purchases have been getting bargain prices and demanding more proof that new technologies will save them time and money in the long run.

"There's just so much resistance to spending," said Michelle Johnson, head of solutions marketing for Volera, a subsidiary of Novell that helps companies manage content on their networks. "If it's a new technology the CTO (chief technology officer) or CEO hasn't seen before, it's called into question."

As a result, she said, the stance many corporate technology directors take is: "We'll spend on stuff we have to do -- all that newfangled stuff I'd like to do, I'll hold off on."

The overall economy is recovering from last year's recession, but many big businesses assembled their 2002 technology budgets last summer, when doubts were higher. That means "projects for this year are locked and loaded," and many new purchases must wait, said Al Case, a senior vice president at Gartner Inc. who directs surveys about corporate technology spending. He predicts an improvement in the second half of 2003.

Last month, Gartner forecast that information-technology spending would increase a slim 1.5 percent this year. Another research firm, Giga Information Group, predicted spending would stay flat.

Not surprisingly, several sectors are slumping.

Oracle, a business software giant, beat analysts' forecasts with its quarterly earnings Tuesday but warned that the next set of results would be below expectations. Adobe Systems Inc., a leading maker of publishing software, also lowered sales and profit targets this month.

Continued cost-slashing in the troubled telecommunications industry is creating headaches for network equipment providers that grew fat in the 1990s Internet mania. …

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