Exec: Sun should avoid hit from tech slowdown

A Sun Microsystems executive thinks the company is better positioned than rivals to handle a possible tech-spending slowdown in 2007

A Sun Microsystems executive said the $US13 billion technology company should be able to handle a possible slowdown in information technology (IT) spending better than some of its larger rivals.

Senior vice-president of Sun's Systems Group, John Fowler, which sells servers and related products, was responing to a research report forecasting slower growth for global IT spending in 2007.

Forrester Research forecast worldwide spending on IT goods and services to grow by only 5 per cent next year, after two consecutive years of 8 per cent growth. Forrester said 5 per cent would be the weakest growth rate since 2003.

Fowler said larger rivals such as HP, which finished its fiscal year with $US91.7 billion in revenue, IBM, forecast to make $US90.72 billion and Dell ($58 billion), were more vulnerable to macroeconomic conditions than the smaller Sun.

"We can, in a weaker market, gain ground in market share by virtue of product and execution, which is what has been happening," Fowler said.

He said when the worldwide server market grew by just 0.6 per cent in the second quarter of this year, Sun's revenue grew by 15.5 per cent, according to a report from the research firm IDC. In the third quarter, when the server market grew only 3.5 per cent, Sun's revenue grew 15.8 per cent.

"You have to pay attention to macroeconomics but ... if you were a $US60 billion to $US70 billion company, the macroeconomics affect you [more] dramatically," Fowler said.

However, Sun's server shares have been in the low double digits and the company has reported net losses in recent quarterly reports.

Forrester said sales in the US, in particular, wouldl be weak as chief information officers at companies reduced spending in the coming year.

"This is a caution flag for IT vendors, 2007 will be a challenging environment," vice-president of Forrester Research, Andrew Bartels, said.

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