Information Age Index November 2008
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Start of a painful descent
To date, the financial performance of IT sector has been relatively untarnished by the economic malaise. But the signs are there of truly difficult times – at least for some.
Behind a relatively modest fall in industry-wide growth in October there are plenty of negative indicators. The Information Age index, which is based on the latest financial results for the industry’s top 200 companies, dropped 0.4% to 11.0% based on results release in October. But as the index is, in this case, largely drawing on results from the July to September quarter and is based on a rolling three-month average, the real erosion that has occurred in the past two months is somewhat obscured.
Indeed, if the smoothing effect of rolling average is stripped out for October, the drop for the month is more like 1.6%.
Portents for the descent were evident among several of the industry’s multi-billion dollar companies. Chipmaker Intel only managed a 1% increase in revenues; server and Java software giant Sun Microsystems saw a worrying 7% drop in its top line; while IT services and infrastructure company Unisys reported a 6% fall in revenues.
Elsewhere, it was often not so much a story of negative growth as one of a slowing pace. Security and storage software company Symantec came up with a below-par 7% rise in revenues, Microsoft turned in 9% growth in its first quarter (half of its fiscal 2008 growth rate) and data warehousing market leader Teradata turned in flat revenues.
But the picture was by no means all negative. Certain segments – especially those where the proposition is one of ‘IT as a business cost-cutter’ – are buoyant. For example, offshore outsourcing companies Tata Consultancy Services, Infosys, HCL, Cognizant and Satyam reported revenue rises of 25%, 32%, 18%, 31% and 35% respectively. VMware chalked up a hefty 32% rise in sales, and some of the utility storage systems upstarts such 3Par and Compellent also did well at 61% and 84%.
However, there is no avoiding the reality that customers’ IT budgets for 2009 will be lower, and that will become clear in financial results – and in the Index – in coming months.
The Information Age Index measures the overall growth rate of the IT industry by tracking the financial results of the world’s most important publicly listed IT companies.
