Turning point?
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The worst may be over for the IT sector. The Infoconomy Index is heading north again after 14 months of constant decline.
The worst may be over for the IT sector. The Infoconomy Index, which tracks the sector's overall growth rate based on the financial results of the 200 largest companies, is heading north again after 14 months of constant decline. Although the Index for February showed the sector shrinking at a rate of 13.9%, this was an improvement on the low-point in January of -14.1%.
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This slight rise was largely down to a strong performance by a handful of major IT services companies. Disaster recovery and financial systems specialist SunGard Data Systems registered a robust 22% increase in revenues, although half of that gain came from the company's acquisition of Comdisco's Availability Solutions business. Also in IT services, Electronic Data Systems was buoyed by a 14% jump in revenues, while its rivals Computer Sciences Corp and Logica reported growth of 9% and 19% respectively. Not fairing so well was IT services vendor Cap Gemini Ernst & Young, where revenues fell by 9%.
However, the greatest negative pull on the index came from network equipment, systems and PC vendors. Tech-sector bellwether Cisco Systems suffered a 29% drop in revenues. It was a similar story for systems vendors, with Fujitsu's revenues down 13%, and Hewlett-Packard sales falling 8%.
But despite the sea of negative numbers, the improvement of the macro-economic climate in the US should soon spell an end to the Infoconomy Index's run of double-digit reverses.
