Wall Street Beat: IT Upward Sales Trend Continues
Though economic concerns continue to roil the markets, major technology vendors such as Hewlett-Packard and Dell continue to report strong quarterly sales gains while market researchers forecast a strong year for IT overall.
Gartner, for example, Tuesday forecast global enterprise IT spending across all industry markets to exceed US$2.4 trillion in 2010, a 4.1 percent increase from 2009. Last year, IT spending across all markets declined 5.6 percent from 2008.
"2010 will see IT spending in all major industries returning to growth," said Kenneth Brant, research director at Gartner, in a report. Government spending was singled out as one of the key contributors to this year's growth.
In a separate report, Gartner said that worldwide mobile-phone sales to end users totalled 314.7 million units in the first quarter of 2010, a 17 percent increase from the same period in 2009. Smartphone sales jumped by 48.7 percent to 54.3 million units.
"In the first quarter of 2010, smartphone sales to end users saw their strongest year-on-year increase since 2006," said Carolina Milanesi, research vice president at Gartner, in the report.
Meanwhile, IDC stoked hopes for the media tablet market, forecasting shipments of the devices to grow from 7.6 million units in 2010 to more than 46 million units in 2014 -- a compound annual growth rate of 57.4 percent. The launch of Apple's iPad has fueled intense interest in tablets, but there are other factors in play as well, IDC said.
"IDC expects consumer demand for media tablets to be strongly driven by the number and variety of compatible third-party apps for content and services," noted Susan Kevorkian, a program director for the company, in the company's tablet report.
IT sales have for the most part confirmed that there is cause for optimism this year. On Thursday, Dell said that revenue for the quarter ending April 30 was $14.9 billion, up 21 percent from the year-earlier period, while earnings rose 52 percent to $441 million.
"This quarter was highlighted by good execution in an improving economic environment," said Brian Gladden, chief financial officer, in Dell's financial statement. "We feel good about the growth across our commercial business as it approaches nearly $50 billion in revenues. We will continue to make investments in our enterprise solutions throughout the year."
HP, the biggest IT vendor in the world, said Tuesday that revenue for the quarter ended April 30 rose 13 percent from the year-earlier period to $30.8 billion. Sales figures are often considered more important than profit numbers as a measure of recovery. While profit can be affected by factors such as layoffs, acquisitions and tax issues, sales are a more direct measure of end-user demand.
Nevertheless, HP's net earnings exceeded expectations, increasing 28 percent from a year earlier to $2.2 billion.
Despite all the good news from tech, vendor shares have been hit by a lack of confidence in the economy. The tech-oriented Nasdaq declined by 94 points Thursday to close at 2204, well off of its 52-week high of 2535, set April 26.
There appeared to be no single reason for the latest round of market jitters. In the past few weeks, however, investors have shown signs that they are worried that economic problems, including Europe's debt crisis, might affect the pace of global recovery. In the U.S., the recovery in the job market has not been as rapid as had been hoped for. Weekly job figures have not yet hit a level that is generally considered to indicate a stable, sustainable recovery. Even HP, the IT star of the week, closed Thursday at $45.95, down by $1.05.