Tech Emerges As A Tentative Hope On The Wall Street
There are apprehension regarding the stability of global economy yet the market analysts are certain that the Information Technology Sector will lead the world of its economic slump.
IDC said on Thursday, it is expected that the Global IT budget will increase by 3.2 percent in the next fiscal year which will be close to the spending of $ 1.5 trillion, the same as the year 2008. The research company said that this is a cautious prognosis which expects the GDP growth to be 2.6 percent.
The IDC reports predict that the emerging markets will be the driving force of the Information Technology Sector during the next year. The bulk of the growth will come from BRIC countries namely Brazil, Russia, India and China which make up for the bulk of the market. These countries will see rise of 8 – 13 percent in IT spending thereby contributing to the market growth, it would be appropriate to mention that this will total up to 10 percent of total global spending.
Frank Gens, the Chief Analyst of the IDC, assured on a conference call on Thursday that High Tech should be the answer to the Recession in the next financial year. And the theme will be that of transmutation and reinstatement.
Gens commented that, reinstatement or recovery is the less appealing proposition of the two; yet many companies had devised enthusiastic plans for the transmutation which will defy the necessity of the PC.
Gens said that the year 2009 has been building a pressure on the information technology industry to look at the latest calculating modules. The next year the reinstatement will ease the pressure on spending which will allow many factors of transmutation to come into play especially those concerned with cloud computing and mobile networking.
Yet the otherwise optimistic report by Gens, ended with a note of caution, he said “Don’t get too relaxed.
In spite of the upbeat reports, there is an underlying vein of caution indicating that the optimism may just be a facade or mirage. The concerns are based on the somewhat flat index of the IT sector over the last few weeks indicating that the recovery may be a long drawn process.
According to John Hussman, President Hussman Investment Trust there is an 80 percent chance that the market will see another dip during the next fiscal year. He discussed these factors as a market comment and another of these comments was a raise in unemployment in the United States of America.
Hussman’s comments paint a very gloomy picture in comparison to other observers yet there are reasons to be careful. Most markets are showing recovery yet the growing profit margins shown by the companies early this year have not been repeated in the latter half of the year.
The Gartner and IDC reported that even though the demand for servers is steady yet the sales figures of the last three months have been less than last year this time.
the server market saw a growth of 13.8 percent from shipments and 10.2 percent from revenue in comparison to the last quarter of 2008 as the demand for server dropped by 15.5 percent in that quarter to $ 10.7 billion
In the same manner the behemoths of the tech world have reported sales better than expected even though they have not matched the previous year’s sales. John Chambers of Cisco announced that they were well on the way to recovery, yet a decline of $9 billion from the previous year’s $10.3 billion has been reported on October 24th.
Yet there are indications that people are beginning to spend again. The first 30 days of the holiday season of November-December have shown a sale of $12.26 billion online, this is a 3 percent rise as compared to the sales figures of the 2008, as reported by the comScore on Thursday.
The investors consider the heavy spending by the vendors as a sign of confidence. Most vendors have their repository brimming from the record-setting pre-recession sales. It is evident by the counterbid placed by Nokia Siemens against Ciena to obtain the Nortel Optical assets. Even so Ciena own the bid by placing a bid of $769 million when Nokia Siemens has objected the sale as they had offered $ 810 million for the same.
The markets in the United States are showing an encouraging start since the Thanksgiving holidays. Even though the broad Dow Jones Industrial Average showed a downward trend on Thursday possible in response to the less than expected figures from the service industry reports offered by the Institute of Supply Management, which has touch its highest point on Tuesday for the year 2009.
Yet the NASDAQ fell by 11.89 points to close at 2173 for the day and 31 points less than this year’s high which is higher than the estimated indices for the year. The composite index of NASDAQ has risen by 39 percent since the beginning of the year while the Dow composite has risen by 15 percent. For the computer companies on NASDAQ the figures are especially good with a rise of 67 percent for the year 2009.