Consumers and Communications to Lead Tech Recovery

Paul Sakuma/Associated Press Apple customers test the iPhone in Palo Alto, Calif.

The qualified good news from Gartner’s new forecast of technology spending isn’t really surprising. Analysts there see a recovery in worldwide spending on information technology in 2010, after a 5.2 percent decline this year, the worst global falloff ever.

The recovery won’t be a vigorous rebound, Gartner predicts in its report released on Monday, but a modest rise of 3.3 percent to $3.3 trillion. More sobering, Gartner projects that the technology market will not reach 2008 buying levels until 2012.

Consumers, communications services and government stimulus programs will be the three main engines of recovery in technology spending, according to Peter Sondergaard, senior vice president for research for Gartner.

The first two, Mr. Sondergaard said in an interview, are closely related. Consumers are increasingly using all kinds of communications services, especially on their cellphones but also on personal computers. That demand then pulls all sorts of investment by telecommunications companies and others in software, technology services and hardware. “So what you get is this cascading effect driven by the consumer and where enterprise technology is pulled along at the end of the cycle,” he said.

Government stimulus programs worldwide, Mr. Sondergaard said, will lift demand for technology goods mostly in three markets: health care, utilities and government itself. And look for hardware to continue to lag, as companies and government agencies more and more buy technology as a service, notably “cloud” computing offerings hosted from the supplier’s data centers.

The cloud model, he said, also makes technology investment more flexible and adaptable to changing circumstances — so business customers assume less risk. “We’ll see an accelerated move from capital spending to operational spending in technology budgets,” Mr. Sondergaard said.

ADR Report-Foreign shrs dip; data suggest sluggish recovery

NEW YORK, Oct 20 (Reuters) - Overseas shares traded in the United States fell on Tuesday as oil retreated from a 12-month high after poor U.S. housing data suggested an anemic economic recovery, prompting investors to book profits.

New York-traded shares of Petroleo Brasil (Petrobras) (PBR.N) was down 3.5 percent at $49.58 while China Petroleum (SNP.N) lost 1.9 percent to $89.47. Bellwether Toyota (TM.N) also dipped 2.1 percent to $78.66.

U.S. crude CLc1 for November delivery fell 52 cents to settle at $79.09 a barrel after rising as high as $80.05, its highest since Oct. 14 of last year.

The Bank of New York Mellon index of leading American Depositary Receipts (ADRs) .BKADR fell 1 percent, while the benchmark S&P 500 index .SPX closed down 0.62 percent.

The Bank of New York Mellon index of leading Asian ADRs .BKAS fell 0.88 percent as Honda Motor Co (HMC.N) fell 1 percent to $30.47 and steelmaker POSCO (PKX.N) lost 2.4 percent to $115.23.

The Bank of New York Mellon index of leading European ADRs .BKEUR was down 0.81 percent. In Europe, shares retreated from one-year highs to end lower, with a sharp decline in Barclays (BARC.L) on a Qatari sale of its stake dragging down financials.

New York-traded shares of Barclays PLC (BCS.N) dipped 4.3 percent to $23.81 and Deutsche Bank (DB.N) fell 1.6 percent to $82.03.

Meanwhile, receipts with the Bank of New York Mellon index of leading Latin American ADRs .BKLA slid 2.81 percent. Stocks plunged in Brazil while Mexico stocks rebounded to positive territory in late trading.

Mexico wireless giant America Movil (AMXL.MX) weighed after the lower house finance committee approved a new tax on telecommunications services.

U.S. traded shares of America Movil (AMX.N) skidded 0.9 percent to $47.60.

Housing, Price Data Points to Sluggish Recovery

Softer-than-expected U.S. housing starts last month and a drop in prices paid at the farm and factory gate pointed to an anemic economic recovery, backing views that interest rates could stay low for a while.

A Commerce Department report on Tuesday showed groundbreaking for new homes rose 0.5 percent to an annual rate of 590,000 units in September, shy of forecasts for a 610,000 unit rate. August's figure was revised down to 587,000. For a graphic showing housing starts data, click on:

http://graphics.thomsonreuters.com/109/US_HSGSTS1009.gif

Separately, the Labor Department said its producer price index -- a gauge of prices received by farms, factories and refineries -- dropped 0.6 percent last month after rising 1.7 percent in August. Analysts had expected prices to hold steady.

"The expectations are for a very tepid economic recovery. The recovery is firmly in place, but I don't think that consumers are going to recognize this until we start to see job growth," said John Canally, an economist and investment strategist at LPL Financial in Boston.