Overview – Ralph Finos Consulting is expecting a -8.8% as-reported revenue decline for 2009 for WW Information Technology spending and a modest +3.4% recovery for 2010. We haven’t yet found a comfortable bottom. The revenues of 70 of 97 (72%) of IT vendor business units were short of the forecast estimates and/or the midpoint of vendor guidance. Currency remains an important factor (a -7% impact for Q1) and will continue to have a negative impact YoY at least through Q209. However, with the dollar weakening in Q2, the results will likely be less poor.
We’re expecting slightly worse poor news in Q2 (-11.9% YoY) and some encouraging (less poor) results in Q309. Look for some positive performance starting in Q409 with a return to recognizable growth rates in Q110. Overall, we’re still looking for some good news for IT.
Product Highlights - There’s weakness all around.
... The 2009 Hardware forecast is for a -16.6% decline vs. 2008
... Software is doing relatively OK at -1.1%.
... Services is weaker than one might have thought at -4.8%.
Hardware is being punished and will barely be in positive growth territory (and then not by much) by 2010. The Server and Storage sector is the weakest (-21% decline expected in 2009) with Servers being much weaker than Storage. PCs (-19%) and Printers & Peripherals (-16%) will be almost as weak. If one includes RIM, Palm, & iPhones, the PC growth rate is -10%.
2010 Picture - The Q109 data points to a 3.4% growth rate in 2010. Software will lead the way back (+7.3%) with Services (+3.5%) and Hardware (0.7%) following.
Q209 Early Indicators - Accenture, Adobe, Oracle, Red Hat, RIM, and Paychex will report by the end of June. They represent ~16% of the model – which will give us a preview of which way the wind is blowing for IT for Q2.
Methodology - This model is based onb historical quarterly as-reported revenue data (5 year minimum) and vendor guidance from ~100 publically held North American-based IT companies and/or their reported business segments. The aggregate revenue in the model is ~$750B – ~ 50% of annual IT Spending worldwide. Foreca... is done for individual companies and then aggregated to various product sectors.
Disclosure: No positions