Companies’ demand for computers, memory products, data networking gear and other technology could increase only slightly next year amid worries about the health of the economy.
That’s according to a survey by Irvine research group Computer Economics Inc.
About 66% of the 125 U.S. and Canadian companies recently surveyed said they expect to increase their information technology budgets in 2008. The other 44% don’t expect an increase at all.
“Our survey data indicates that executives have already scaled back their expectations for IT spending increases in 2008,” said Frank Scavo, president of Computer Economics.
On average, companies expect their 2008 IT budgets to increase 2.5%, down from 2007, which saw a 5% rise over 2006 spending, the report showed.
“Though positive, these expectations are conservative,” Scavo said. “In fact, if these expectations are accurate, 2008 will show the lowest level of IT spending increase since 2004, when it was flat.”
Eyeing businesses’ IT budgets helps local tech gear makers gauge demand for their products. Orange County counts several tech companies, including memory products maker Kingston Technologies in Fountain Valley, disk drive maker Western Digital Corp. in Lake Forest, Aliso Viejo-based QLogic Corp. and Costa Mesa-based Emulex Corp., which both compete in the host bus adapter market,circuit boards that help data flow between networks.
Large companies,those with yearly revenue of more than $750 million,are showing signs of cutbacks.
Roughly 33% say they will spend less than budgeted this year while only 22% indicate they will spend more.
The economy as a whole has a big impact on budget outlooks, the report said.
Concerns about weakness in the housing and credit markets, a weak U.S. dollar and employment figures factor into IT spending, according to Scavo.
“Although these problems have not yet noticeably affected business investment, they could be precursors to slowing growth,” he said. “If economic conditions do worsen, we expect that median IT spending in 2008 will be flat. We do not yet, however, see widespread cuts.”
Quest Buy
Aliso Viejo-based Quest Software Inc. bought Reston, Va.-based Provision Networks Inc., another business software maker with a lot of government customers.
Terms of the deal, which closed Nov. 9, weren’t disclosed.
Provision Networks makes “virtualization” software, which helps manage networks that can up their storage and speeds without using additional servers.
“This acquisition marks an important step forward for Quest in both our virtualization offerings and our Windows desktop management capabilities,” said Chief Executive Vinny Smith in a statement. “We see virtualization as the next great frontier in information technology.”
Paul Ghostine, cofounder and chief executive of Provision Networks is set to report to Smith and continue to head up the unit, which has about 20 workers.
Provision Networks has customers in manufacturing, finance, education and healthcare.
A good chunk of its sales come from the government including the U.S. House of Representatives, the Army, Air Force and General Services Administration, among others.
Both companies’ products are based on Microsoft Corp.’s Windows platform.
Quest makes software that monitors and improves the performance of Microsoft business programs. Provision Networks markets and sells software that monitors and enhances Microsoft’s virtual server platforms.
The acquisition helps Quest ride into an emerging software market, according to Daniel Kusnetzky, principal at Kusnetzky Group, a consulting firm in Osprey, Fla.
“The deal gives Quest a way to step carefully into the broader market for management software for virtualized environments without having to directly develop their own strategy; find and hire their own talent; and start the process of making a name for itself in a new market,” Kusnetzky wrote on his blog, “The Virtualization Man.”
Microsemi Fills CFO Spot
Irvine chipmaker Microsemi Corp. said it’s set to hire a new executive vice president and chief financial officer.
John Hohener, who came on board in January 2006, is set to fill a spot left by David Sonksen.
Sonksen, who has been with the company for more than 20 years, plans to retire next year. He joined Microsemi after holding a similar position at Western Digital.
Sonksen has seen dramatic changes at Microsemi, which makes chips for notebook computers, liquid crystal display televisions, satellites and a variety of devices for aerospace and defense customers.
During his tenure, the company has made more than 30 acquisitions and has grown its market value from $50 million to nearly $2 billion.
Sonksen has been training Hohener for the job.
“I made a decision a couple of years back that in due course I would retire from the company and have more time to enjoy my 10 grandchildren,” he said.
New Conexant Exec
Newport Beach chipmaker Conexant Systems Inc. said it hired an executive to lead its broadband group in New Jersey.
Craig Garen, 49, is set to be senior vice president and general manager of the company’s broadband access unit, which designs chips for DSL modems and related products.
It’s based out of a design center in Red Bank, N.J.
He’s replacing Akram Atallah, who’s leaving the company for another job.
Garen is set to report to Chief Executive Dan Artusi, who came on board earlier in the year.
