IBM: U.S. enterprise spending slumped in March

Summary:Just yesterday it appeared that technology spending was solid despite a blip in the first quarter. IBM may have put the kibosh on that idea with its first quarter earnings.

Just yesterday it appeared that technology spending was solid despite a blip in the first quarter. IBM may have put the kibosh on that idea with its first quarter earnings.

IBM's first quarter earnings conference call highlighted a March slowdown in the U.S. From there, many questions revolved around U.S. spending. IBM can weather it since its business is truly global (60 percent of revenue outside the U.S.) and Asia and Europe look strong. Other technology firms may not be as lucky.

IBM CFO Mark Loughridge noted that "while we had a strong close to the quarter in other geographies, the U.S. was noticeably weaker."

Here's what Loughridge had to say when pressed about U.S. demand:

"I am not going to make an economic forecast here. If you look at the U.S., however, we did see weakness, predominantly at the end of the quarter, in our enterprise space. Really, SMB did fine, especially consistent with prior rates. I do expect that we’ll see improvement in the U.S. as we go into the second quarter...We do have some work to do in the U.S., but I am confident we’ll see some improvement as we go into the second quarter."

On whether demand was pushed out to the second quarter:

"The U.S. had actually a pretty good January and a pretty good February. The falloff was really in the last month of the quarter. Now, if you look at the deals, we certainly did have some deals roll over into the quarter.

And if you look at the pipeline, as we would look at it across our business lines, we think we have a pretty good pipeline as we go into the second quarter. We are taking actions to improve our performance in the U.S. as we move into the quarter. And we have confidence in those."

On why does IBM think U.S. demand will improve in the second quarter:

"I would look at the overall pipeline and opportunity moving into the second quarter globally first. And I just said that we had a really spectacular performance out of Asia-Pacific, and we see that trend in Asia continuing as we go into the second quarter.

We saw real improvements in Europe, led by Germany, up a rather strong 10%. We see Europe continuing as we go into the second quarter. And as we look at the pipeline, we see encouraging signs in the pipeline, especially since the issues that we saw really in the U.S. were more a function of just the most recent month of March, not necessarily January and February."

In the end, IBM's comments are just one data point, but it makes sense to monitor U.S. demand closely.

Topics: IBM

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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