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In Search of the Missing Uptick

The optimism about IT spending for 2004 has hit a snag: namely, the seasonal lull that typically affects sales of SAN gear in the first quarter of any year. And so far, seasonality is winning.

As the segment's earnings reports roll in, EMC Corp. (NYSE: EMC)
and Adaptec Inc. (Nasdaq: ADPT) showed its possible to increase revenues sequentially -- although their revenues grew far more year-over-year.

Dot Hill Systems Corp. (Nasdaq: HILL), LSI Logic Corp. (NYSE: LSI), QLogic Corp. (Nasdaq: QLGC), Storage Technology Corp. (StorageTek) (NYSE: STK), and Veritas Software Corp. (Nasdaq: VRTS) all reported sequential revenue drops despite strong year-over-year gains. Emulex Corp. (NYSE: ELX) barely beat its revenues from last quarter. (See EMC Earnings Up, Dot Hill Puts Revenues at $48.8M, QLogic Reports Earnings, StorageTek: No IT Spending Uptick, and Veritas Holds Steady.)

The trend should come as no surprise. When storage execs spoke at the end of 2003 about increased spending this year, they usually said the surge would come during the second half of 2004 (see Storage Bigs Brash on Budgets and HP Leery of Uptick Talk). Spending certainly hasn’t come ahead of schedule.

"While the IT environment shows some signs of progress, there's no real growth in budgets," said StorageTek CEO Patrick Martin when announcing earnings. And while EMC and IBM Corp. (NYSE: IBM)
execs saw IT spending pick up in the quarter, even the optimists say the real surge is yet to come (see IBM Storage Holds Steady).

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