I’m wondering how much IT budgets might be cut …
In a February 6th teleconference with financial analysts Cisco CEO John Chambers said that in the quarter ending in April the company’s revenue would increase by just 10 percent. As the company’s forecast had been for a revenue growth of between 13 percent to 16 percent for the 2008 fiscal year Wall Street wasn’t at all happy with the news and the stock trade volume jumped up by just over 47 percent and although the share price dropped 8 percent at the start of the 7th it recovered to end the day more or less where it had ended the previous day.
What did Chambers blame most of the revenue fall off on? Yep, you guessed it, the financial sector but hard on their heels (or perhaps that should be “soft on the heels”) came “retailers as well as automakers and other transportation companies” (see Business Week). Surprisingly Chambers didn’t have anything to say on the effects of the softening candlestick makers market.
Overall, the financial analysts see Cisco’s softening market as indicative of an overall weakening of market confidence and a herald of what will become a serious cutback in IT spending across the board.
So, are you prepared for budget cuts? What gets cut first? I’m betting new projects will be at the top of the list but after that what?
And if the cuts go really deep when does it all start to implode? What’s the event horizon where the budgetary black hole reduces IT capability beyond the point of no return?
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