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Wednesday, October 04, 2006

More Signs of Tech Slowdown

By William Trent, CFA of Stock Market Beat

According to CIO Magazine, businesses are growing more cautious toward technology spending.
September’s CIO Magazine Tech Poll shows IT spending projections continuing to slide. CIOs are now predicting IT spending increases of 6.5% over the next 12 months, down slightly from 6.9% reported in last quarter’s poll. Overall spending across eight technology categories is also down this quarter. Storage systems is the top spending priority, while computer hardware and security software are tied for the number-two spot.

Historically the CIO opinion poll has been something of a lagging indicator. Tech purchases are specified by CIOs but the ultimate buy decision belongs to the CFO, who typically sees changes in business and financial conditions before the CIO is aware of them. As a result, the CIO focuses on what the CFO told them to do last (hence the lagging indicator.)

Still, the survey confirms other data we have been seeing, both from the consumer and business sides. All of which adds up to expectations that the semiconductor glut is going to be a big one.

The author may hold a position in the securities discussed. A current list of the author's holdings is available here.

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