Tech execs new hobby: Calling IT spending bottoms
Technology executives have a new hobby: Calling IT spending bottoms. However, some refuse to play along.
Intel kicked off the bottom calling fiesta last week. Intel CEO Paul Otellini said "we believe PC sales bottomed out during the first quarter and that the industry is returning to normal seasonal patterns."
And then on Thursday EMC joined the parade. EMC CEO Joe Tucci said on the company's earnings conference call:
As I look to the balance of 2009 I do believe we are at or very near the bottom from an IT spending point of view. I continue to believe that the second half of the year will show an improvement with Q4 holding the most promise but, I do believe that Q2 will continue to be sluggish. A little more predictable but sluggish.
Why sluggish? I believe that customers will continue with their just enough, just in time IT spending patterns. They too are looking for signs of improvement and while there is some light at the end of the tunnel they will likely wait a bit and continue to be cautious.
Is it just me or is everyone trying to call the turn? The reality: None of these guys can predict out more than a few months. There appears to be some thaw in spending but no one knows how long it will stick.
Enter the anti-bottom callers. Microsoft CFO Chris Liddell said the company sees a slow and gradual recovery, but weak spending could persist through 2009. Simply put, it's too soon to call a bottom, said Liddell.
Indeed, it's so early that Microsoft isn't providing earnings or revenue guidance even though its business is one of the more predictable operations around.
AMD CEO Dirk Meyer summed up the view of the anti-bottom callers:
You know, I’ve heard some say that we’ve hit bottom. I don’t know how anybody could say that we’ve hit bottom given the continued uncertainty that we have in the macroeconomic climate. And as a result of that I would say we’re simply being cautious in our outlook.
AMD's outlook for the second quarter is somewhere between up 10 percent and down 10 percent. In other words AMD's guess on PC demand is as good as anyone's. Meyer gets the quote of the week nod:
You can see – you can drive trucks through some of those numbers, whether it’s a positive 10 or a minus 10. So it’s hard to figure out in a normal pattern what’s with average, what happens in second quarter. And then you add into it the current economic environment and it really becomes a little bit foggy.
Maybe the bottom is in. Maybe it's not. In any case, Meyer probably has the most accurate take for now.