Software spending may be weak for second half: Report

CIOL Bureau
New Update

PALO ALTO: Chief information officers recently surveyed by analysts at Morgan

Stanley have sobering news for software vendors - many of them have no plans to

increase technology spending in the second-half of the year. "It's what we

had feared all along. Now we have confirmation," Morgan Stanley analyst

Chuck Phillips told Reuters on Friday.


Chief information officers set companies' technology priorities and only 34

per cent of CIOs who responded to Morgan Stanley's questions said they planned

to spend more money during the remainder of 2001. "It's just the opposite

of what we usually see," Phillips said. That means software makers could

experience a small, unexciting blip in December sales, he said.

Software sales tend to jump during a company's fourth quarter as commissioned

salespeople push to get deals included in annual results and customers drag

their feet to exert maximum pressure in negotiations.

While most software makers have so-called back-ended results and could be

hurt by lackluster spending in the second half, not all peg their financials to

the calendar year. Oracle Corp.'s fiscal year ends on May 31 and Microsoft Corp.

wraps up the year's business on June 30.


The Morgan Stanley survey, which was issued earlier this week, also found

that CIOs are reducing the numbers of software vendors they work with and remain

reluctant to undertake large, expensive projects. "There aren't many things

people are willing to spend $20-$30 million on right now," said Phillips,

who noted that companies are looking for easy, low-risk projects.

That could be good news for the world's biggest software maker. The survey

found that CIOs were most likely to say they would increase second-half spending

on Microsoft’s Windows 2000 desktop and server upgrades, Microsoft Office

upgrade; e-commerce initiatives and network equipment.

(C) Reuters Limited 2001.