Moody's Upgrades Technology Hardware Sector to Stable

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Two days after identifying it at as one of the top candidates for upgrade, Moody’s Investors Service Thursday changed its Industry Sector Outlook for the U.S. Technology Hardware sector to stable from negative. The outlook expresses Moody’s expectations for the fundamental credit conditions in the industry over the next 12 to 18 months.

This change in outlook reflects our view that elements of demand stabilization are beginning to develop throughout pockets of the broad technology sector, which will contribute to modestly improving performance over this time horizon.

Corporate IT spending has been very constrained during the last nine months of significant economic uncertainty, while consumer demand has been surprisingly resilient. Recently, there have been developing data points, including improved semiconductor demand and better than expected PC sales that point to demand stabilization in the second half of 2009 and positioning for low-single-digit growth in 2010.

Notwithstanding the still weak global economy that will impact year-over-year performance in the third calendar quarter, Moody’s Senior Vice President, Richard Lane said “we foresee a stronger potential that the fourth calendar quarter will see pockets of year-over-year revenue growth due to a significantly reduced “fear factor”, a lapping of the awful Q4 of 2008, plus reducing headwinds from foreign currency as the dollar weakens.”