Goldman Sachs Smacks Software Stocks

See this story on SeekingAlpha (which might consider renaming itself SeekingShelter), entitled Goldman Slaps Most Software Stocks.

Excerpt on aggregate spending:

The worst of the IT-spending slowdown likely remains in front of us, as we start the clock on slashed 2009 budgets. We forecast 0 percent revenue growth for our group, below consensus at 5 percent, and 1 percent earnings growth, below Street at 2 percent.

The most interesting point addressed is whether the downturn will drive consumers to open source (i.e., nominally “free”) software:

There has been much discussion in the blogosphere about open source software and how it will see a surge of adoption do to its lower cost. Goldman quite rightly says this will not be the case. I have written that CIOs will hunker down and stick with the tried and true (which is not open source in most large-sized enterprises) and Goldman is in agreement, seeing a consolidation of functionality with big, established vendors and a moving away from the concept of seeking best-of-breed point solutions regardless of vendor.

On sectors:

So in terms of non-defense technology companies we are batting two for two: Neither hardware not software will be spared over the next several quarters as the outlook remains dim for both.

Happily for Mark Logic we have a large defense / intelligence business, which I believe will offer shelter from the storm. And, as I’ve argued before, for non-advertising-driven media companies, I believe that GDP growth (or lack thereof) is a second-order effect relative to seismic changes driven by the Internet and Google to which MarkLogic helps them respond.

One response to “Goldman Sachs Smacks Software Stocks

  1. Hi,In all over the world you will see the ups and down of the technology software.I think the economy performed a very important role to developing to the any country.

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