IT spending looking up for 2011
November 22, 2010 —
(Page 1 of 2)
Analysts are expressing optimism for IT spending in 2011, as companies show improved earnings coming out of the deepest U.S. recession since the 1930s.
“Our survey results indicate a positive near-term read on IT spending consistent with an optimistic view of the fourth quarter," wrote the analysts in a Goldman Sachs study released Nov. 5 called “IT Spending Survey.”
"Our total IT spending index [which includes salaries, services, depreciation, etc.] increased to the highest level since November 2007... We increase our 2010 growth estimate to 8% from 7% previously due to stronger vendor results year to date."
However, analysts could not pinpoint if they are “merely optimistic because of 4Q trends, or could 2011 be relatively better for IT spending despite a low growth U.S. GDP [gross domestic product] environment, given cash-rich corporate balance sheets,” the survey said.
On the heels of the Goldman Sachs survey, Google gave an unexpected US$1,000 cash holiday bonuses to its 25,000 employees and a 10% company-wide raise effective Jan. 1, 2011. In addition, Google will move a portion of the bonuses into employees’ base salaries, ensuring they get to keep the whole thing, said Google CEO Eric Schmidt.
Brian Belski, chief investment strategist at Oppenheimer (an investment advisory firm), pointed out that tech companies have also become more economical with the way they are run.
“These companies have dramatically changed their business models in terms of how they manage their businesses and are much more conservative. It’s all about the balance sheet and cash flow. It’s about under-promising and over-delivering,” he said.
“Remember, this is a sector that many people blamed for the bubble in 1999 and 2001...so, they’ve had a complete reshaping of how the sector is looked upon and, I believe, relative to 10 years ago, this is a sector that is now much more professionally managed. [There are] true CEOs, true CFOs, where in the 1990s it was easy for the stocks to go up because there was so much demand and technology was hot.”
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