Wednesday, April 18, 2007

IBM Warns of Lower Tech Spending

From the WSJ:

International Business Machines Corp. reported first-quarter earnings rose 8% but said slow U.S. capital spending held down results, raising concerns about leaner times ahead for companies like IBM that depend on robust business spending


The numbers were in line with expectations. But IBM's comments that it saw an unexpected U.S. sales slowdown in March caused analysts in the company's conference call to probe for hints about whether business spending is slowing broadly, with implications for the overall economy.

"Everything was going great until they started talking about weakness in U.S. enterprise spending, especially in financial and telecom which are economically sensitive," said Chris Whitmore, an analyst with Deutsche Bank. "It created a lot of concerns about that big-spending group." Mr. Whitmore noted that storage giant EMC Corp. also cited U.S. revenue weakness in reporting earnings yesterday.

And from CBS.Marketwatch

Goldman Sachs downgraded IBM to neutral from buy, citing a slowdown in U.S. tech spending

While this is just anecdotal evidence, IBM had $91 billion in revenues in 2006. That means paying attention to what they say might be a good idea.