Tech Fears, Tech Spending

NetApp, like so many this quarter, turned in OK numbers and somewhat weak guidance, which was enough for the Street to send the stock down by 15% in after-hours trading.  Coming after Dell and a downgrade of HP pre-earnings, the NetApp news was seen as a reinforcement of the challenges tech stocks face.  In yesterday’s trading, the tech-rich NASDAQ was off when the Dow and S&P were both very slightly up.

In fact, it looks like the Street has decided tech is in trouble, interesting less for the conclusion than for the fact that the signs have been around since the spring and the Street was happy to put on its look-only-at-the-quarter blinders.  I noted in June that our survey was showing a pushback of project spending combined with some front loading on budgetary items.  That netted a roughly on-track trajectory for the first half.  When, in the second half, project spending continued to be pushed back and budget spending had to slow, we took a hit.

The good news is that while “lost” budget funding is rarely made available in the following year, we’re not dealing with that in 2011.  What’s happening is that project spending is being slow-rolled, and because projects have a specific benefit case attached, they are likely to be funded in 2012 if conditions improve.  That would create a hike in spending next year, again presuming macro-economic problems that are hurting consumer and business confidence are solved.



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