Software Sales Most at Risk

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Technology companies will be pulling out all the stops to close sales before the September quarter closes next week, even as customers spooked by the U.S. financial meltdown shy away from spending. Solution providers and IT consultants are likely to find themselves right in the middle.

Tim Ghriskey, chief investment officer of New York-based Solaris Asset Management, which manages about $2 billion, said that the rush at the end of the quarter tends to affect software makers more than hardware companies.

"Software companies notoriously either make or miss their quarter in the last few days of the quarter. Given the economic environment the risk of missing the quarter has definitely increased," Ghriskey said.

Talk of the economic uncertainty overshadowed Oracle OpenWorld, an Oracle Corp (ORCL.O) users conference held in San Francisco this week and attended by some 43,000 customers of the world's third-largest software maker.

Nucleus Research analyst Rebecca Wettemann said that some IT managers she spoke to at the conference were delaying signing new deals.

"We were already seeing a push-out of deals in financial services. I think other sectors are now going to be a little bit slower," she said. "If something were already in progress, I think it will continue. But where the decision was going to be made at the end of the quarter, it is likely to get pushed."

Forrester Research expects some technology orders to be pushed out from the third quarter, and the firm expects things to get uglier in the fourth quarter as companies look at how their own business fared in the third quarter.

"By then you will start to have companies closing their books on Q3 and finding that 'Oh my God, it was a lot worse than we thought,'" said Forrester analyst Andrew Bartels.

Eric Johnson, a professor at the Tuck School of Business at Dartmouth, said that large companies in Europe have just started talking about measures to contain tech spending in the past few weeks.

"When you look inside European Fortune 500 companies, particularly hard-core manufacturers, it hasn't felt like the cliff is on the horizon. That has started to change," said Johnson, who was in Europe last week meeting with corporate technology executives. "Last week in particular, I felt sort of a queasiness starting to set in."

(Editing by Leslie Gevirtz)

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