Firm foresees rise in tech spending in '04

By Brian Bergstein
Associated Press

NEW YORK — The high-tech industry's extended slump finally could be over, according to a report released yesterday by a firm of analysts that predicts next year will see the first significant increase in technology and telecom spending since 2000.

Worldwide spending on information technology should grow 5 percent to $916 billion next year, while purchases of telecom services are expected to rise 4 percent to $1 trillion, according to International Data Corp., a highly regarded analyst firm based in Framingham, Mass.

After rising 12 percent in 2000, the last year of the dot-com boom, technology spending fell 1 percent in 2001 and 4 percent in 2002, IDC analyst Stephen Minton said. He predicts spending will end up relatively flat this year, with growth in the United States and emerging markets but declines in Europe, Japan and Canada.

Next year's growth is expected to come from improving business confidence and pent-up demand for technology products and services at companies that reined in spending during the past few years.

Minton said the findings were based on conservative assumptions about the economy, meaning even bigger boosts could be possible. Indeed, CIO magazine said yesterday that its October survey of 243 corporate technology managers found that their budgets will grow an average of 6 percent in the next year.

Other technology watchers have been more circumspect lately.

A Merrill Lynch report last week said that few of the 100 corporate technology buyers the firm had interviewed in the United States and Europe expected to spend more than normal in the current quarter.

In October, Intel Corp.'s chief financial officer said the chip giant had seen "bits of evidence" but no overwhelming signs that tech spending was picking up.

The next day, IBM Corp. chief Sam Palmisano said his company was counting on a rise in spending in 2004, but added that "it is too early to say that a rebound is at hand."