The brand-name computer makers are expected to show firm growth in their quarterly financial results this month, but this may not pacify investors who fear the depressed global economy will put the brakes on technology spending next year.
Computer companies are expected to meet or even surpass earning forecasts for their September quarter results which will be released in the coming weeks. This in most part will be thanks to the seasonal sales upturn that normally kicks off each year in the third quarter and carries on until Christmas.
The majority of computer makers will finally be able to kiss goodbye to the glut of PC inventory that strangled many of their financial results earlier this year. In the past few weeks, however, shares have fallen amid the realisation that the global economy is in crisis. Investors are now anxious to see how much corporates plan to spend on information technology in 1999. And so they should, according to economists.
?Capital growth will slow quite significantly next year,? Mitchell Held, manager of US economics at Salomon Smith Barney told 'Newswire'. ?Expected economic growth is slow and estimates will continue to be marked down in the months ahead.
?Corporate profitability will be weak, in fact there is likely to be an outright decline in a very difficult pricing environment,? he added.
US brokers are advising investors to focus on stocks that are on a ?hot product cycle? such as Apple with its iMac or companies with a compelling theme such as Dell, whose direct sales strategy is going from strength to strength.
Analysts, however, are forecasting that the consumer computer market will remain relatively buoyant, despite world economic turmoil. ?Prices are looking good and the intention is there,? said Pete Day, an analyst for market research company Inteco. However, he admits that Inteco has cut its shipment forecasts amid world recession warnings. ?Shipments stood at 15 per cent this year, we are looking at 10 per cent next year,? he said.
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