Soft Earnings by Intel, IBM, Others Linked to Elections: Analyst
Businesses are delaying IT spending until the presidential and congressional elections are over Nov. 6, Forrester analyst Andrew Bartels says.Intel, IBM and Microsoft are among a large number of top-tier tech vendors that saw weak third-quarter earnings, with executives from many of these IT companies talking about a difficult global economy that is forcing enterprises to keep a tight grip on their IT dollars. However, while economic times in Europe are particularly difficult, issues in the United States may be more about tech buyers waiting to see the outcome of the presidential election, according to Forrester Research analyst Andrew Bartels. In a recent post on the Forrester blog, Bartels said the spate of soft third-quarter earnings from a wide variety of vendors doesn’t indicate the start of a downward trend in the tech market, and that he expects spending to start picking up the fourth quarter and into 2013, after the presidential and congressional elections are set and politicians can begin work again on the fixing the U.S. economy. “Yes, there continues to be weakness in Europe, with most countries there in or close to recession,” he wrote. “But the U.S. economy seems to be gathering strength, with consumer confidence on the rise, retail sales increasing, and the housing sector improving. China, which had been showing signs of slowing growth, also appears to be picking up. So the economic fundamentals are pointing toward an improving tech sector in Q4 2012 and 2013.”
What is most worrisome to CEOs and CIOs is the looming “fiscal cliff” in the U.S. economy—specifically the threat posed by a combination of the Bush tax cuts expiring and the deep cuts in domestic and military spending that were part of the deal struck by the White House and Congress during the confrontation over the debt ceiling. President Obama said during the last debate Oct. 22 that he didn’t believe those deep spending cuts would take place and that an agreement could be worked out to avoid them.