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Merrill: IT spending to lag into 2002

Corporations are continuing to keep their purse strings tight when it comes to technology spending, according to a Merrill Lynch survey.

Corporations are continuing to keep their purse strings tight when it comes to technology spending, according to a new survey from Merrill Lynch.

The brokerage house is now predicting 2002 spending to grow a mere 4.6 percent in 2002, up slightly from the 2.6 percent growth rate it's now predicting for this year. The targets are based on a survey of 50 chief information officers in the United States and 15 in Europe.

"We don't see near-term improvement," the Merrill Lynch team wrote, noting that while most users don't expect further cuts, 40 percent said they were possible. And most of the managers surveyed said they didn't see a pickup in spending coming until at least the second quarter of next year.

On the bright side, Merrill found that 70 percent of respondents said their companies' stock price didn't affect IT spending. "We wouldn't be surprised if the stock did play a role as a psychological factor," said Merrill. Recently, research firm IDC warned that continuing global economic problems could force companies to trim as much as $150 billion in worldwide IT spending between 2001 and 2003. Its also recently lowered its predictions for global PC unit shipments.

Networking and storage are two areas where CIOs are most likely to spend their money, the survey revealed, while PCs and services are the areas they're most likely to cut back on.

It's somewhat unclear which companies will benefit from the pickup in spending; many companies turned up on both the "winning share of your budget" and "losing share of your budget" lists. IBM actually led both lists.

However "Microsoft and Dell were mostly winners and HP a loser," Merrill Lynch noted. "IBM's service capability is a strength for many users but a negative for others," the brokerage house found.