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Techs could be earnings wreck

Friday, July 13, 2012 - 02:18

July 12 - Economic storms swirling across the U.S., Europe and Asia could sweep up the tech sector, which starts to turn in its quarterly report cards next week. Bobbi Rebell reports.

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REFEED TO CORRECT RESTRICTIONS ON SLATE AND SCRIPT - NO ACCESS BBC Earnings season could be a wreck for techs. Warnings have been getting louder- most recently from Indian software services exporter Infosys- which slashed its sales forecast- again- saying global economic uncertainty is hurting tech spending. Analysts say some of the biggest names- like Intel, Microsoft, and IBM could disappoint. Forrester Research's Andrew Bartels: SOUNDBITE: ANDREW BARTELS, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING: "Economic factors, the European situation, the return of debt crisis, their debt ceiling crisis too, the fiscal cliff coming up, the weakness in China and India, given concern how strong the tech sector is going to be." Companies are reluctant to boost spending on technology when they are worried about their own economic well being. SOUNDBITE: ANDREW BARTELS, PRINCIPAL ANALYST, FORRESTER RESEARCH (ENGLISH) SAYING: "If corporate revenues are looking tighter, uncertain, then sales are going to ratchet back. If it looks like it's gonna do better if it's expected, then it tend to move up. So what I think we're seeing is CIOs tend to be a bit cautious." According to research firm Gartner, IT budgets will only rise this year by 3 percent- less than half the pace of last year. Growth will slow in all 5 key sectors: computing hardware, enterprise software, IT services, telecom equipment, and telecom services. Demand from emerging economies is unlikely to pick up the slack. Cliff Waldman is the senior economist at the Manufacturers Alliance for Productivity: SOUNDBITE: CLIFF WALDMAN, SENIOR ECONOMIST, MANUFACTURERS ALLIANCE FOR PRODUCTIVITY (ENGLISH) SAYING: "Two or three years ago when we were coming out of the great downturn, 2008 and 2009, I would have been able to say well, at least we have those strong large emerging markets as sort of a global counter balance. Unfortunately I can't say that now. Chinese growth is slow. It has slowed fairly dramatically. And growth in other large emerging markets, India and Brazil has slowed even sharper than in China. " One bright spot: Apple- which has been carrying the sector. It's beaten forecasts 7 of the past 8 quarters- and is expected to do it again this quarter. Bobbi Rebell, Reuters.

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Techs could be earnings wreck

Friday, July 13, 2012 - 02:18