ANAHEIM, Calif.— Technology spending is creeping back, notwithstanding the results of database giant Oracle Corp., PeopleSoft Inc. CEO Craig Conway said Monday.
“Oracle’s results could mean something about technology or they could mean something just about Oracle,” he said. (Conway said he believed the latter, not the former.)
Oracle Corp. shares dropped 43 cents Friday, to $12.55, after it reported that sales of new licenses to its software fell 7percent. The company’s profits for its first quarter of its new fiscal year were up 28 percent to $440 million. But its revenue of $2.07 billion was $70 million shy of Wall Street analysts’ expectations. Software license sales fell to $525 million from $563 million.
Conway said the performance of Intel Corp., the big chipmaker, is a better indicator (a “fabulous precursor”) of technology spending. Intel corp. on September 4 slightly boosted its forecast for sales in the current quarter, the third quarter of its fiscal year, to between $7.6 billion and $7.8 billion, compared with the previous range of $7.3 billion to $7.8 billion announced on Aug. 22. Results in its second quarter, announced July 15, showed revenue up 8 percent year over year to $6.8 billionn. Net income doubled to $896 million. The previous year, though, was hurt by $208 million worth of writeoffs.
In mid-August, Dell Inc., the maker of Intel-based computers, also announced its “best-ever operating results,” with revenue up 16 percent from the previous year, to $9.8 billion. Net income reached $621 million, up from $501 million.
Conway also said consumer spending is picking up and the economy appears to be on the way to “steady recovery” from the depths of doldrums induced by the bursting of the dotcom bubble in 2000, the terror attacks on the East Coast in 2001 and cost-cutting to preserve profits by companies of all sizes that followed in the past two years.
The economy is set to expand at a 2.6 percent pace in 2003 and 4.0 percent in 2004, according to a panel of 35 economists in a report released Monday. The National Association for Business Economics (NABE) said the U.S. economy will expand at a 2.6 percent rate this year. In May, the group had predicted growth of 2.3 percent and 3.6 percent, respectively. The group said the Bush $350 billion tax cut is driving up consumer spending and business investment. The NABE surveys 35 economists to get its forecasts.
Conway said spending will continue to pick up as corporations move more of their back-office operations (such as invoicing, collecting and collaborating with business partners) onto services rendered over the Web to match front-office sales and customer service operations they have already migrated.
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