Signs of a Recovery?

Analysts may currently be at odds over the future of IT spending in 2003, but three tech firms are ready to start the New Year with upbeat news, announcing Monday that they expect to exceed guidance for the quarter that ended Dec. 31, 2002.

Integration software provider webMethods issued a preliminary statement Monday, saying that its fiscal third quarter 2003 results are likely to exceed the upper end of the company's previous guidance for a pro form loss of six cents to zero cents per share. Consensus among analysts call for a loss per share of about three cents.

webMethods also said it expects total revenue to be greater than its previous guidance of $46 million to $51 million for the quarter.

Meanwhile, storage giant EMC said Monday that it now expects its earnings to come in at about 1 cent to two cents per diluted share for fourth quarter 2002, though after including an approximately $160 million pre-tax charge related to its restructuring that number is expected to be a loss of about two cents to four cents per share. Analysts are looking for a two cents per share loss for the quarter.

EMC is looking for revenues for the quarter to exceed $1.47 billion.

Finally, Mercury Interactive, which specializes in business technology optimization, is expecting pro forma diluted earnings per share for its fourth quarter to come in between 25 cents and 27 cents a share, though including a write-off of $5 million connected to investments in non-consolidated companies brings the diluted EPS on a GAAP basis to about 20 cents to 22 cents. Analysts are looking for EPS of 20 cents.

The company is anticipating total fourth quarter revenue of about $116 million to $118 million.

All three companies will release full details for the quarterly results later this month.

The upbeat pronouncements come in the wake of varied opinions from analysts on the outlook for tech spending in 2003. A Goldman Sachs Group report issued Thursday -- based on a survey of 100 IT managers who influence tech decisions at top companies around the world -- found that tech spending is likely to drop in 2003. The December survey found 37 percent of respondents predicting a drop in their spending, leading to a prediction by the firm that IT spending will drop by 1 percent. The majority of respondents, 66 percent, also said that their companies will only begin investing in IT again when revenue and profitability increases. Another 43 percent said it will be at least a year before IT budgets begin to climb.

But other surveys, like on by Aberdeen Group -- also released last Thursday -- suggests instead that Worldwide IT spending will grow by a modest 4 percent in 2003 and will continue at that level through 2006.


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