September 24, 2003 11:28 AM PDT

Study says hardware spending is up

Related Stories

Mixed signals for IT spending

September 15, 2003
The information technology hardware industry is witnessing "modest and sporadic" signs of growth, though it may be far from a full-scale recovery, according to Standard & Poor's.

A persistent atmosphere of caution had marked the IT spending scenario, even though the U.S. economy is looking up, with continuing growth in the gross domestic product, the ratings company said in an outlook released Wednesday. As a result, companies have been restricting IT investments to well-defined projects with prospects of near-term return.

But now, there are signs of growth. The U.S. Department of Commerce has reported that in the June 2003 quarter, spending on IT equipment had its highest growth since 2000, chalking up an increase of 7.6 percent. And research company IDC reported a surge in PC shipments in the second quarter, the first return to double-digit growth in almost three years.

S&P expects Dell, Apple Computer, IBM and Hewlett-Packard to be early beneficiaries of improved spending, while high-end system makers--Sun Microsystems and Silicon Graphics Inc.--will continue to suffer due to suppressed demand. S&P considers Intel's recently raised September-quarter revenue forecast a positive sign, since Intel is widely viewed as a bellwether for the technology industry.

Dell will benefit from future employment growth and associated PC and hardware spending, given its growing position in the small-to-medium business (SMB) market, S&P said. IBM, which has reported improved revenue growth in the SMB sector in the first half of 2003, will also gain. And Apple will be helped by new product launches and improvement in core "creative" markets such as the advertising industry.

Pointing to an operating loss HP reported in its personal systems division in the July 2003 quarter, S&P said "the extent to which HP's Personal Systems division (about one-third of total revenues) benefits from improved IT spending will be more dependent on HP's competitive position and improvements in its cost structure."

 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.