World Bank sees output 'collapse' as does tech

The economic contraction is painfully obvious in server and PC sales. Research firm IDC estimates that the worldwide server market is expected to decline 29% year-over-year to $10.6 billion in the second quarter, the fourth consecutive quarter of decline. PC sales have tanked as well. in the first quarter, reported market researcher iSuppli Corp., the biggest decline in the firm's seven years iof market tracking. But as bad as the is, the recession is not hitting IT departments as severely as the 2001-2002 dotcom bust, according to forthcoming research from research firm Computer Economics. Frank Scavo, president of the firm, said its latest data, based on a survey of 200 companies, found that 45% of IT managers are increasing operational spending this year. Normally, the number of IT managers reporting an increase in spending would be between 60% to 80%. Many companies have laid off staff but are hiring contractors to complete work. In 2002, during the dotcom bust, 36% of companies in the U.S. and Canada were increasing spending, Scavo said. Compared to that period, "I don't see a systemic collapse," he said. But he warned that these companies could be forced to make additional cuts. Scavo will release capital spending projections later, but the problems with capital spending are apparent in reaction of Wall Street to the World Bank's assessment. Investors sent stocks down Monday. A sampling: IBM was down 1.29%, Cisco Systems Inc., 2.7%; Hewlett-Packard Co., 1.59% and Oracle Corp., 3.34%. The World Bank put a lot of the blame on credit problems. It also said the tight links between global trade in durable, capital and high-tech equipment "can be detected in the vicious circle that now operates between the financial and real sectors of the global economy."