Awful 2009 Tech Spending Will Lead to Faster Rebound
Posted by: Rob Hof on June 30, 2009
Worldwide spending on information technology equipment and services will plunge 10.6% in U.S. dollars, according to a new report from Forrester Research. That’s way down from the market research firm’s forecast at the start of the year, which predicted only a 3% drop.
The U.S. will fare relatively better than the rest of the world, with spending there forecast to fall 5.1%. According to Forrester, purchases of computer equipment will be down 13.5% for the year, communications equipment down 12.4%, software down 8.2% and IT consulting and outsourcing down 8.6%.
But the precipitous drop in first-quarter tech spending will mean a faster-than-expected recovery starting later this year, according to analyst Andrew Bartels (and flagged in a mid-April story in BusinessWeek):
While Q1 2009 saw a scary drop in purchases in the US tech market, ironically that is good news for the long run and we expect to see a stronger rebound sooner. The big drops are not precursors to further declines; rather, we think they are evidence of a temporary pause in US tech purchases, which we expect to start recovering in Q4 as businesses realize that they overreacted in the first quarter. We also expect that tech markets in Europe and Asia will start to recover in the first half of 2010.
It appears that investors also are already anticipating this. The tech-driven Nasdaq is up 17% so far this year, compared with less than a 3% rise in the S&P 500.