We are just at the start of the earnings releases on Q3 2012 vendor revenues and a week and a half from the first release of US GDP data on business technology investment in the quarter, but it is already clear that Q3 2012 will be a weak one in terms of tech market growth. IBM reported a 5% revenue decline its third quarter; Microsoft had an 8% decline in total revenues, and we estimate a 5% decline in its sales to business; and Tibco had a 3% drop in its revenues for its quarter ending August 31, 2012. Oracle's software revenues for its quarter for the same period rose by 2% (with license revenues down 1%); and Accenture saw its revenues for the same period rise by just 2%. While there have been some positives — Tata Consultancy Systems' revenues were up by 13%, and Adobe had a 7% increase in its revenues — weakness has been the dominant story so far.
Is this the start of a downward trend in the tech market? I don't think so. Yes, there continues to be weakness in Europe, with most countries there in or close to recession. But the US economy seems to be gathering strength, with consumer confidence on the rise, retail sales increasing, and the housing sector improving. China, which had been showing signs of slowing growth, also appears to be picking up. So, the economic fundamentals are pointing toward an improving tech sector in Q4 2012 and 2013.