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Sour Report on Storage Spending

Remember the increased IT spending that storage companies were counting on for 2004? Well, it hasnt happened yet, and now a Wall Street investment firm says it not likely -- this year or next.

Goldman Sachs & Co. today issued a research note saying its CIO survey indicates tech spending isn’t what its analysts expected. They revised 2005 revenue forecasts downward for a bunch of companies, including Brocade Communications Systems Inc. (Nasdaq: BRCD), EMC Corp. (NYSE: EMC), Hewlett-Packard Co. (NYSE: HPQ), McData Corp. (Nasdaq: MCDTA), Network Appliance Inc. (Nasdaq: NTAP), Storage Technology Corp. (StorageTek) (NYSE: STK), Sun Microsystems Inc. (Nasdaq: SUNW), and Veritas Software Corp. (Nasdaq: VRTS).

According to the note written by analyst Laura Conigliaro, anticipated revenue growth for the storage sector is now 6 percent compared to previous guidance of 8.4 percent.

The gloomy outlook is primarily for next year. Goldman Sachs’s vendor forecasts for 2004 mostly remain the same, and a research note issued by RBC Capital Markets last week says storage revenues are in line or slightly above expectations for the current quarter that ends in two weeks.

Further, as the third quarter winds down, it appears likely that fewer companies will issue earnings warnings compared with last quarter.

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