Banks delaying tech purchases
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| EMC division president Mark Lewis says banks are slow to spend these days. Image: EMC |
With the turmoil in the financial markets, it shouldn't come as a surprise that banks aren't going on a spending spree. That's one of the backdrops to Fortune's Brainstorm Tech conference in Half Moon Bay, where a handpicked group of tech luminaries have gathered to talk about the digital future.
In a side conversation near the bar here at the Ritz-Carlton, EMC (EMC) executive Mark Lewis drove it home. Financial services companies are "doing very thorough reviews" before buying tech gear, he said – that's a nice way of saying they're tight-fisted – and that's bound to have a real impact on companies that sell to them. (Think Dell (DELL), Sun Microsystems (JAVA), Cisco Systems (CSCO) and others.) Lewis, president of storage giant EMC's content management division, didn't seem alarmed. He said that because customers haven't recently overspent on technology, the buying pause isn't likely to last long. But for now, they're pushing for a faster return on their investment in technology, because budgets are tight.
Good points made here. This is what makes tech companies good longer term bets, because when the economy does improve and companies start spening they will spend big. The demand will allow margins to grow and you will see a wave of M&A's. That is why my portfolio contains a number of tech stocks (Goog, Apple, Brocade) for the longer term. Another big factor is government spending on IT, which will return once we are out of Iraq. All these forces will come together to create another tech bubble in 2010/2011.