Companies’ spending on technology goods and services is likely to be sluggish for the rest of this year but will rebound in 2009, according to recent data from Cambridge, Mass.-based Forrester Research Inc.
Information technology spending is set to grow about 3% this year and bounce to 10% in 2009, Forrester’s second-quarter outlook showed.
The group said it expects that the slowdown in growth this year will get worse before it gets better.
“This slow growth rate is mainly due to an assumed mild, two-quarter recession in the U.S. economy,” said Andrew Bartels, principal analyst at Forrester. “The effects of higher gasoline prices and declining employment are more likely to mean that both U.S. economic activity and IT purchases will turn down in the second and third quarters.”
The good news is that Forrester expects to see a resurgence in buying in 2009 and 2010.
“Both the economy and the U.S. tech market will start to improve in the fourth quarter of 2008, with tech purchases poised for much stronger growth in 2009,” Bartels said.
The sectors hardest hit by the slowdown this year are computer products and networking gear, according to the report.
Makers of servers saw the biggest drop in sales growth. Sales are down 11% over a year earlier for the server businesses at companies such as Dell Inc., EMC Corp. and Unisys Corp., which has big operations in Mission Viejo.
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However, makers of devices for large data storage networks, including Aliso Viejo’s QLogic Corp. and Costa Mesa-based rival Emulex Corp., aren’t doing too badly.
That group has seen second-quarter sales rise 10% from the same period a year earlier, the data showed.
Another group is faring better than expected: IT consulting and outsourcing firms.
“Historically, IT consulting and systems integration take it on the chin when the economy slows, as executives cut back on their spending,” Bartels said. “We had expected this pattern in 2008,but so far it hasn’t happened.”
The biggest U.S.- and India-based outsourcing companies, including Accenture Ltd., Infosys Technologies Ltd., WiPro Ltd., Tata Group unit Tata Consultancy Services Ltd. and Satyam Computer Services Ltd., have seen their revenues jump 10% from a year earlier.
Locally, Aliso Viejo’s UST Global Inc., which has about 100 workers here and thousands in India, is on a fast-growth track.
The privately held company is eyeing a public offering when it hits the $500 million sales mark some time next year.
Bringing MacNeal Back
Santa Ana-based MSC.Software Corp., a maker of simulation software, brought one of its founders back into the fold via an acquisition.
MSC said last week it purchased Altadena-based MacNeal Group LLC, a small cadre of software engineers headed by Richard MacNeal,the guy who put the “M” in MSC.Software.
Terms of the deal were not disclosed. MSC is set to fold in the handful of engineers and programmers that worked for MacNeal in its local operations.
MacNeal, who lives in Pasadena, will be brought in as a part-time consultant.
In 1963 he helped start MSC (then called MacNeal-Schwendler Corp.) after developing simulation software for NASA’s earliest space programs.
The software, dubbed Nastran, is short for NASA structural analysis. It’s the industry standard for simulation software that helps manufacturers of cars, airplanes and space shuttles tinker with designs and test how they might react before they are built.
MacNeal retired as chairman and chief executive from MSC in 1997, after running the company for more than 30 years.
He went on to start the MacNeal Group in 2004 and continued to fine tune the software he created.
“He never really left the business,” said Joanne Keates, vice president of investor relations at MSC. “He’s the guru of the technology on which all of the Nastran simulation software is built.”
MacNeal improved the software in one specific area, called “parts and assemblies” by industry insiders.
It takes small groups of parts, such as the axle, brakes and tires that make up the front wheels of a car, and models how they fit together and how they might perform under different conditions, Keates said.
MSC’s customers are global manufacturers of airplanes, spacecraft, cars and heavy machinery.
MacNeal, who is 85, was inducted into the National Academy of Engineering in 1996.
Name Change
Irvine-based Raining Data Corp., a maker of software that customizes and sorts results from big search engines such as Google and Yahoo, changed its name to TigerLogic Corp.
The company changed its name “to better reflect its new focus on browser-based and integrated search tools it plans to introduce,” it said in a statement.
Earlier this year it changed its ticker symbol to TIGR.
For the March quarter, TigerLogic posted $4.9 million in sales, up a bit from $4.7 million a year ago.
The company narrowed its loss to $6,000, much less than the $500,000 it lost a year ago.
TigerLogic had a recent market value of about $126 million.
