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War Jitters Delay Spending

Just when you thought the business environment couldn't get any worse for the IT industry -- and the storage sector along with it -- it apparently is. The most recent stumbling block, according to Wall Street analysts, is that customers are delaying purchases in light of the uncertainty over a U.S.-led invasion of Iraq.

RBC Capital Markets last month interviewed 32 storage and SAN-focused integrators and distributors about growth expectations for the first calendar quarter of 2003 and found that the looming war is freezing spending in many cases.

"The need is there, the budget is there -- but customers are not signing off on deals just yet," says RBC analyst Steve Denegri.

In a note to investors this week, the firm writes that the March quarter will be "abnormally back-end loaded." On the bright side, "vendors are responding to a number of requests for quotes, suggesting pipelines are growing." But on the downside, RBC says, "customers are, in a number of cases, hesitant to make purchasing decisions given the uncertain geopolitical climate."

But working out just how much of an impact this uncertainty will have on the overall quarter is difficult to tell.

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