Server Sales, A Proxy For IT Spending, Take A Hit (HPQ)(IBM)(DELL)(INTC)(AMD)

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By Douglas A. McIntyre Updated Published
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bearA drop in server sales is bad news for companies that build them including HP (HPQ), IBM (IBM), and Dell (DELL) and the firms that supply chips–AMD (AMD) and Intel (INTC). But, it is also grim news for the entire IT industry.

According to The Wall Street Journal, server sales in the first quarter were abysmal. “Worldwide server revenue fell 24.5% during the quarter, which is the biggest annual percentage drop since IDC began tracking server sales in 1996.”

The figures are a clear indication that corporations are cutting their tech costs to the bone. That, in turn, says that many companies do not see their sales improving and need to chop whatever costs they can. Server sales may not be a good measure of the corporate economy as a whole, but they are an excellent way to view the extent to which tech spending, one of the largest costs of many large companies, is still being undermined by the recession.

If the Q2 IDC figures are as bad as they were in the first quarter, a recovery in corporate earnings may still be a way off.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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