But after a major company-wide restructuring and the divestiture of several non-core businesses, CEO John Chambers (pictured here at D5) is finding that turning the massive Cisco ship around — something he seemed to have started two quarters ago, and which continued last quarter, isn’t coming easy.

There’s the global economy to worry about. All that messy complicated news coming out of Europe about sovereign debt and cuts in government spending around the world has a way of eating into technology budgets both at Cisco’s government customers and at its large enterprise customers.

Cisco’s guidance for the quarter ending in July was especially worrisome for investors, who promptly sent Cisco’s share price plummeting by more than 8 percent in after-hours trading. Cisco called for revenue to grow between 2 percent and 5 percent, which works out to sales in the range of $11.4 billion to $11.8 billion, well off the consensus forecast of $12 billion.

Guidance on earnings was equally disappointing. At 44 cents to 46 cents a share, the midpoint lags the consensus by two cents.

So what’s going on? I asked Chambers about it in a phone interview with AllThingD held after the conclusion of Cisco’s conference call with analysts.

AllThingsD: John, the markets clearly don’t like very much what they saw today. So, from a high level, what happened — good, bad and indifferent — with this quarter?

Chambers: The first thing from a high level is that we’re executing pretty well on our vision and strategy, and we did exactly what we said we would do. We guided for growth of 5 percent to 7 percent for the year and for the first nine months we’re at 7.5 percent [revenue]. We said profits faster than revenues, and we’re at 9.5 percent. Earnings per share increasing 13 percent year over year for the first nine months and gross margins down just 1 percent primarily on product mix. We’re winning versus our key competitors and winning at a pretty fast rate. When you’re number one or two in most product categories, holding your own in switching and making it very challenging for the Huawei’s of the world, the Junipers and Hewlett-Packards … Juniper and HP we’re pulling away from and we’ll see if we can maintain it. Huawei, for the first time we’re getting much better and competing against them and understanding their weaknesses. And if you look where we are in terms of the bigger picture, we’re in the right markets. We’re in the mobility market. We’re in video. We’re in the cloud market. We’re in the social networking segment. We’re pulling them all together, and our customers are buying the architecture in a pretty good amount. Even in service providers, where most people thought they would never move toward having preferred vendors, we’re seeing something close to that at some service providers and at many of them they are starting to think about going all-Cisco.

So on things we can control and influence I think we’re in pretty good shape. In terms of the market, I’d like to add another couple of points [of growth] in service providers, another couple of points from commercial customers. The public sector is at 3 percent. I’d take that for the year, but we think it’s going to be flat, give or take a couple points.

The issue is the enterprise. And there the problem is not that they don’t have the money or that they don’t understand that it’s important to get productivity. It’s that they’re uncertain. When they are uncertain, that’s because of economic issues primarily because of Europe. And uncertainty on government policy. Then you see people deciding not to invest. And that affects not only capital spending but jobs.

So I think the market understood what we’re saying and I think most people would give us credit for being a very good indicator of what the point in time change is. But this is not necessarily a given for what is going to happen in the second half of the year. I’m just trying to be as transparent as I know how.

The July quarter is usually your seasonally strongest. Given that your guidance was relatively weak compared to the consensus, what are we to make of the quarter coming up? Is it a secular weakness or mostly the economy? Are your competitors just taking it on the chin worse that you are?

Let’s look at Juniper. It’s down 6 percent a year and routing down 9 percent. Huawei is growing 11 percent a year, but its service provider segment is growing only 3 percent. HP’s networking business is back to the levels in their switching business to what they were when HP first bought 3Com. There’s an explosion in the data center business, it’s to the point that companies who have been there a long time like IBM or HP, we’re growing 67 percent and their servers are flat or slightly down. So the results speak for themselves in terms of what we’re doing right in some areas. But we’re learning to tie things together in a way that saves customers money, saves them time to market and allows them to achieve their business goals quicker. That is the game we’re playing for. The major thing we’re after is getting the enterprises spending again. Customers — almost uniformly — are saying that my business is okay, not great, they expect it will go up gradually, and that they’re probably going to spend more in the second half of the year than they did in the first. But immediately as a follow-up to that, they all say that’s true only if they’re not surprised by something from the economy. That’s the kind of uncertainty we’re seeing, and in talking with my peers in the industry who are in similar markets, they can finish my sentences. The question is whether it’s temporary or is it a blip? We just don’t know yet.

So given the restructuring we’ve been talking about for the last year or so, is Cisco the right size? Your overall headcount is down more than 8,000 from a year ago, but it’s up by more than 1,300 since the last quarter. Are you at the right size or are there more changes coming?

Out of the 1,353 people we added, the vast majority were either advanced services or engineers. We needed more engineers. The additions were around either building products or converting services. In terms of our organization structure, we re-did Cisco. We’ve learned from what we did well in the past, and you wouldn’t see the turnaround as quickly as we did if the structure weren’t so strong. But we needed to restructure how our customers buy, and how we build products. We needed to be nimbler and simpler in how we get decisions done. And that is a journey. In the past we tended to get a market transition, good or bad, and take off on a good one or address a bad one, and we would end up gaining market share almost always coming out of these. We’ll see if we do it again this time. But we weren’t constantly reinventing ourselves to avoid hitting the next wall or the next inflection point. That is what we’re trying to do. This is a continuous journey. While we were four or five inches around the waist, I think there’s still more work to be done in our middle levels. I think you’ll see us address that in the next year or two. Does that mean we’re going to adjust the market given that the market may have slowed? I’m not sure it has yet, we’ll know in a couple of quarters which way it’s going. The answer is, not in a major way. It’s too early to say which way this market is going. We’re not going to over-react or under-react.

You just made a major acquisition with NDS, about $5 billion. You still have a lot of cash on the balance sheet. What’s your stance on acquisitions?

Ongoing at Cisco we will do innovation through internal development, including internal start-ups, through strategic partnership, and acquisitions and intergrating all of the above. NDS is one of multiple moves that we will make, not just in the video space for us, but it was also a major cloud play for us and a major social media move if we do this right. It plays right into the sweet spot of our service providers and content providers. Our ideal target has not changed: 100 engineers with a product that is just about to come to market, where our customers say that if they were owned by Cisco they’d buy a lot of it. The $5 billion price is higher than what we’ve traditionally paid, but it’s on the order of Stratacom and Tandberg, for which we paid about $3 billion each. But our ideal target is smaller, and you’ll see us continue to be selectively active in the market.

You’re said to be heavily focused on gross margins. One point that came up on UCS: You say it’s growing like crazy, off a low base, but one of the analysts pointed out this week that it has the overall effect of bringing down the gross margin a bit. How are you addressing that?

That’s true on specifics. UCS by itself, even with a premium versus our peers, is going to be below our gross margin of 65 percent. So, by definition, as you add more of those it has a major effect on gross margin. When you combine UCS with our Nexus 2000 and 5000 switches the blended version gets the margin higher, though still not as high as the overall gross margin. Our challenge on gross margin, and the reason why we’re going to focus aggressively on each gross margin area this year, is that it’s more of a product mix issue than it is an issue of pressure on gross margins on any specific product. In terms of the base for UCS, it’s getting close to a $2.5 billion run rate and probably closer to $3 billion by now. So the base is getting larger, and in North America our market share is close to 20 percent and globally our best guess is 14 percent as best as we can tell. So that’s pretty good execution.

At this point, as he did last time we talked, Chambers asked me what song I’d pick to musically illustrate Cisco’s quarter, sticking with a tradition started a few quarters back and continued last quarter. I told him I wanted it to be a surprise, but that I think he’d like it.

This quarter, I dedicate to Cisco Ringo Starr’s “It Don’t Come Easy.” The hard work of transformation done, Cisco is finding that, despite being leaner and meaner, it has still got some way to go and finds itself in a tough market. In the video below, Ringo performs with fellow Beatle George Harrison at the 1971 Concert for Bangladesh. As everyone at Cisco knows, nothing worth having comes easy.

She was in New York yesterday for a lunch with a few journalists, primarily to talk about Intel’s latest generation of Xeon processors for servers. Before they were officially released, these chips were known primarily by their code name, Romley, and often still are when analysts and others talk about them, because the code names are easier to remember than the product names, which, for the record in this case, is Xeon Processor E5-2600.

The Romley generation of chips builds on the foundation of Intel’s previous generation of server chips, known by its code name, Nehalem. The main benefit, which Bryant and other Intel execs and customers explain in lengthy detail in this video from the product’s launch in San Francisco three weeks ago, is that the chip is 80 percent faster at certain computing jobs, according to independent tests. At the same time, it is 50 percent more energy efficient.

Executives who operate data centers generally worry about two things: The raw number-crunching power they can squeeze out of the chips in their densely packed racks of servers, and the cost of the power required to keep them running and also keep them cool. So the introduction of a chip that can get more work done in a shorter amount of time while using half as much power is, at first glance, a pretty compelling moment to consider an upgrade.

And yet, that doesn’t seem to be the case. In a survey of 100 CIOs of large enterprises conducted by the investment bank J.P. Morgan, 91 said that they didn’t see Intel’s Romley chips as much of a catalyst for upgrades in their data center. Most seemed happy with the Nehalem-generation chips they had just purchased in servers during the past two to four years.

I was eager to share this result with Bryant to see what she said, and was too rude to wait until the salad course had arrived. For a moment, she was surprised — 91 percent is a pretty large percentage, after all. But the surprise didn’t last more than a few seconds.

Off the top of her head, Bryant rattled off the following, which I’m paraphrasing. On a recent visit with a customer who happens to be one of the 100 largest companies in the world — she wasn’t at liberty to identify it — Intel found an interesting result.

A check of the company’s data centers found that 36 percent — a little more than a third — of its servers were using chips that were more than four years old, meaning that they dated back to the dim mists of the days before Nehalem.

Those servers, it turned out, were responsible for consuming 65 percent — nearly two thirds — of its power supply. And how much computing muscle was the company getting for all this power? Precious little: The servers in question provided only 4 percent of the computing power of its infrastructure. To sum up: A third of the data center footprint was eating up two-thirds of the power budget, but providing less than one-twentieth of the overall computing capacity. Those older chips just aren’t pulling their weight.

“This is is extremely typical of what we’re seeing,” Bryant told me. Even so, she conceded that a customer running a larger percentage of more-recent chips — Nehalem and its newer variants — in its infrastructure might not see the sufficient bang for the buck of an upgrade that anyone running a lot of servers with older chips probably would.

I have to admit it was a pretty good answer.

Veghte joined HP in 2010 after 20 years at Microsoft, where he managed the $15 billion Windows business and oversaw the launch of Windows 7. At HP, he has been credited with growing its software revenue by 18 percent last year.

Given Veghte’s history as a software guy, his appointment to this role can’t help but be seen as a key signal by CEO Meg Whitman of the role she sees software playing in HP’s strategy going forward. That was one of the things I asked Veghte about when we spoke by phone earlier this week.

AllThingsD: What, in your view, is the role of the chief strategy officer at HP, and what do you expect it to entail in the coming year?

Bill Veghte: As we’re out talking to customers, they’d like to buy more from HP; they’d like HP to be more successful. They look at the advances we’re making in networking or storage or printers, but they want to know why the whole is greater than the sum of is parts. What is HP’s strategy for continued leadership in the market transitions that are going on? And some customers would say that where HP is concerned, that’s not a fully realized opportunity.

And you’re coming at it from the software part of the business, and we’ve heard from Meg saying she’d like to grow opportunities in software. Your appointment, to me, sends a bit of a signal that software is going to be a big part of HP’s strategy to get things turned around. Is that accurate?

I think, certainly, as I talk to Meg and Ray [Lane, HP chairman], and with the members of the executive committee, I’ve found that this is a catalyzing role. If done right, there are different models of strategy in different Fortune 500 companies. And the one that makes sense here is catalyzing with other business units. Whether that’s Vijay Joshi in printing and imaging, or with Todd Bradley in PCs, or John Visentin in the enterprise group, there’s a strategy that each one of those is trying, and which is accretive to a whole that is greater than the sum of the parts. And so, to the extent that software is glue or networking is glue, I think it’s a statement that has more to do with a pan-HP strategy than something that’s specific to software.

What’s Job One, starting on your first day?

Job One is making sure that as we have those conversations with customers, they see an HP that is unified around a set of constructs and offerings that deliver what they need. It’s different from having offerings that are, by themselves, individually great. It’s about having unifying themes and constructs.

It seems that you’re talking about finding a way to routinely and thoughtfully combine different things that HP makes or does, in ways they aren’t being done now. Is that what you’re getting at?

I think that very accurately characterizes the opportunity. When we talk to the leadership team, we hear a lot of the same thing. There is a lot of great stuff within HP, whether you get that in terms of market position, or IP, or people. I like how you put that: How do you routinely and thoughtfully combine things, particularly in light of the market inflections that are happening. We are in a tectonic shift, and that can be an opportunity, if you clearly spell out the value proposition for customers. Not only in each one of the units, but where you’re thoughtfully combining them so that the whole is greater than the sum of its parts.

I thought of an example around meeting the needs of the market. There was an IHS iSuppli report out earlier this week about cloud servers, which are growing. But customers are going to Taiwanese ODM companies to get customized products, while at the same time cloud servers are growing generally. Is this the sort of thing that might affect HP?

I was talking to Dave Donatelli [general manager of Enterprise Servers] about this recently. It’s interesting, because it seems like in more recent months it has flipped back, because of the integration within that customization. A great example that Dave and I have been working on is the whole cloud system piece. You’ve got a lot of great stuff in automation and orchestration software that is inherently cross-platform, and which crosses virtualization engines and marrying that deeply with the converged infrastructure. We’re the only company that can give you a single stack, soup to nuts, from a single vendor. The core construct is that there’s a lot of private cloud build-out going on, and those customers who are doing it are saying they don’t want to be the systems integrator for six different vendors, and they also prefer not to be locked in to a single vertical stack. That’s a huge advantage for us. And to your point about routinely and thoughtfully combining, we should do exactly that. It’s been doing well for us in the marketplace, but how do you make that routine against the opportunities we see in the marketplace?

You spent about 20 years at Microsoft. How does that inform what you’re bringing to this job?

At the core, any of these jobs are about identifying and exploiting market shifts for customers. I had the privilege of having a front-row seat during some big marketplace disruptions, and helping catalyze businesses and delivering superior market positions and solutions. It’s all about handling change, and turning it into an opportunity.

The new forecast calls for companies and governments to spend a combined $3.8 trillion on information technology, which would amount to growth of 3.7 percent from 2011. The previous forecast had called for growth of 4.6 percent.

For perspective, the difference on a dollar basis is about $100 billion, which is certainly real money, but when you consider the various puts and takes affecting the projected spend, it makes a certain amount of sense.

Gartner says that all four of the major technology sectors it tracks — computing hardware, enterprise software, IT services, and telecom equipment and services — will see their growth rates slow this year.

You can probably guess why: The uncertain global economy, the euro zone sovereign debt crisis and the disruptions on the hardware supply chain from last year’s flooding in Thailand on hard-drive production have all teamed up to perform a triple whammy on the tech sector. The Thailand problem will probably last until well into 2013, Gartner’s Richard Gordon says in a statement, echoing what Seagate CEO Steve Luczo told AllThingsD in an interview in November.

Telecom equipment spending will probably suffer the least, Gartner says. Sales in that sector will grow by nearly 7 percent to $475 billion, followed by the enterprise software market, which will grow by 6.4 percent to $285 billion. The chart at the right, which I screengrabbed from Gartner’s handout, breaks down the revised outlook by each sector versus what the previous growth outlook had been.

Gartner also trimmed its average annual growth projection for IT spending through 2015. It now expects spending to grow by about 5 percent on average, down only slightly from 5.4 percent, but in the wider scope of a few trillion dollars, a fractional change still amounts to hundreds of billions of dollars.

Despite everything, corporate spending on IT was going to hold steady, went the conventional wisdom. Big tech companies selling to big companies — except the financial ones — were supposed to have the situation well in hand. All those big companies looking to get things done in a faster, cheaper and more efficient manner would be writing big checks to the big lumbering tech companies, which would translate into operational savings: Faster servers, faster PCs, cloud services, better software.

At least that was the conventional wisdom until today. Now Oracle has gone and harshed whatever buzz there was left. Once investors got their heads around the wider implications of the software giant’s disappointing quarter, they concluded that the entire enterprise tech sector required a sharp spanking. Here’s a rundown of the damage:

• Oracle shares fell by $3.40 or nearly 12 percent, and briefly traded within 20 cents of their 52-week low.
• IBM, recently the engine of steady, dependable tech growth, fell $5.77, or more than 3 percent.
• Cisco Systems fell 49 cents, or more than 2 percent, and teamed up with Big Blue as the day’s worst Dow performers.
• Salesforce.com fell 5 percent.
• VMWare fell nearly 10 percent.
• SAP fell $3.49, or more than 6 percent.
• Hewlett-Packard held up (relatively) better than the rest, falling only 47 cents, or less than 2 percent.

Okay, you get the picture. Investors wanted out of any stock that touched enterprise tech today. Oracle is considered a bellwether. The result was predictable. But does the crux of the argument that fueled today’s fear have any merit? Maybe not.

There are reasons to hope it’s not quite so bad. For example, IT consulting house Accenture, which saw its own stock fall more than 4 percent today, recently reported a pretty good quarter, with record revenues and earnings. Its strength came from $7.8 billion in new bookings, which isn’t exactly a negative indicator.

Second, even if corporate spending does slow down, tech M&A deals could help larger companies grow despite themselves. Oracle, Cisco and IBM have a combined $87 billion in cash and short-term investments among them. And as we’ve seen, there’s still plenty of appetite among large tech companies for gobbling up smaller ones, especially in the red-hot software-as-service space.

Recent examples include SAP’s $3.4 billion acquisition of SuccessFactors, Oracle’s $1.5 billion deal for RightNow, and Salesforce’s grab of Rypple.

And the potential targets are numerous: There’s Taleo, NetSuite, Workday; even newly public Jive Software.

Finally, the currency weakness that has Oracle and so many other companies running uphill when dealing with non-U.S. customers isn’t going to last forever. Yes, it’s true that IT companies like it better when the dollar is weak against the euro. Considered from that angle, Oracle and other global tech companies suffer less from a demand problem than a temporary — though it is going on way too long — currency problem.

But even if the euro crisis does last well into next year, there are still the BRIC countries, which Intel, another significant tech bellwether, can’t stop praising. And — dare I say it? — the U.S. economy is showing signs of coming back to life. In several states, private payrolls are growing just enough to offset the declines in employment at state and local governments, and as new tax revenue flows, government payroll declines will slow, as well. As 2012 wears on, the U.S. might find itself rolling into an honest-to-goodness recovery, which would fuel improvements to IT budgets. Though the hard-drive shortage caused by the flooding in Thailand won’t make this any easier.

So don’t worry. Or don’t worry too much.

It turns out worldwide spending on IT by companies is proving surprisingly resilient given the circumstances, according to a new forecast by the market research firm Gartner. The firm expects overall tech spending to grow by 7.1 percent this year, representing an upward revision from a previous forecast of 5.6 percent.

In dollar terms that works out to a total forecast of $3.6 trillion. Of that, Gartner expects $419 billion to be spent on computing hardware, $268 billion on enterprise software, $846 billion on IT services, and $2.1 trillion on telecommunications. (It’s fun to type the word “trillion” and not be referring to federal spending.)

“It is a bit surprising that we have not seen a more significant impact on our global IT spending forecast as a result of the Japan earthquake and tsunami, but despite widespread concerns about disruptions to the supply of critical components in the initial aftermath of the natural disaster, there has not been a dramatic impact on overall IT spending,” Gartner’s vice president for research Richard Gordon said in a statement.

Spending on cloud services is a big factor in the forecast. Gartner says cloud-related spending is growing four times faster than IT spending, and will reach $89 billion this year. However, it’s informative to note that despite that intense growth, cloud spending amounts to less than three percent of the overall IT spend.

Even so, cloud category punches above its weight in importance. Gartner says that software-as-service applications — Salesforce.com is a classic example — account for about $10 billion, or about 10 percent of spending on enterprise software. More from Gartner here.

The good news is that Gartner has revised its outlook upward. Companies and governments will spend $3.6 trillion on IT this year, which is more than the prior $3.4 trillion forecast, amounting to growth of 5.1 percent. Sounds great, right?

Yes, but it’s complicated, especially from the U.S. point of view. The weak dollar makes the figures look a little better than they are. In 2010, Gartner says, IT spending grew 2.2 percent, but more than half of that–1.6 percent–can be attributed to the devaluation of the dollar against other currencies. Companies and governments spending other currencies can get more dollars for their money, and so this tends to inflate the appearance of growth, Gartner’s Richard Gordon told me.

A weak dollar is generally good news for U.S. companies that do a lot of global business. U.S. products and services look more attractive to non-U.S. buyers. But in cases like this, U.S. companies end up paying more for items that get imported and for raw materials.

That’s not to say there isn’t actual growth. Gartner says spending is picking up fastest on telecom equipment, with computing hardware and enterprise software following close behind.

Spending on discretionary items like IT services and consulting is coming back the slowest. When the economic crisis hit in late 2008 and early 2009 these were the first items on the chopping block, and spending on them is only now beginning to make a comeback.

In short, signs of weak PC demand, combined with fears of a slowing recovery in IT spending, indications of inventory expansion in the supply chain and general worries over the lackluster economic recovery have spurred multiple analysts to rethink their positions on the sector generally and on a variety of individual issues. Today alone, there were downgrades and estimate cuts from a number of firms.

Here’s a rundown.

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Cisco Systems (CSCO) after the close yesterday posted stunningly good results for its January quarter, and provided April quarter guidance that was way above Street expectations. CEO John Chambers could not have sounded more optimistic about the quarter and the outlook if he tried; he said the company saw a broad-based recovery across all geographies and product sectors. The company is seeing continued improvement in enterprise spending, a surprise surge in demand from carriers, and a turnaround in Europe, which has been lagging an IT spending recovery in the U.S.

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This, according to research firm Forrester, which claims technology spending will roar back to life in 2010, ending the econalypse once and for all.

“While the Q3 2009 data for the U.S. and the global market showed continued declines in tech purchases (as we expected),” the company said in its report, U.S. and Global IT Market Outlook: Q4 2009, “we predict that the Q4 2009 data will show a small increase in buying activity, or at worst, just a small decline.”

Forrester (FORR) expects U.S. IT spending to grow by 6.6 percent in 2010 after falling 8.2 percent in 2009. Meanwhile, global IT spending, which plummeted 8.9 percent last year, will rise 8.1 percent in 2010 to more than $1.6 trillion.

Driving the recovery: Software, hardware and communications equipment. According to Forrester, worldwide spending on software is set to grow by 9.7 percent in the months ahead, spending on hardware and other computer equipment by 8.2 percent and spending on comm gear by 7.6 percent.

Said Forrester principal analyst Andrew Bartels: “All the pieces are in place for a 2010 tech spending rebound. In the U.S., the tech recovery will be much stronger than the overall economic recovery, with technology spending growing at more than twice the rate of gross domestic product this year.”

But this assumes there will be no further financial disaster in 2010. If this is not the case, then we have something else to look forward to.

“The most likely alternative to our forecast that the U.S. and global IT markets will recover in 2010 is a faltering tech market due to a double-dip recession that returns in 2010 after a brief two- to three-quarter economic recovery,” Forrester explains. “Should this happen, U.S. tech purchases would decline by 3% to 4% in 2010, with a second-half decline offsetting a first-half tech revival.”

PREVIOUSLY:

• Econalypto: A Rightsizing Roundup
• Google: Whoops! Econalypse
• Econalypse Now
• Analyst: The Great Dark Times Cometh!
• Wall Street: Give Me Something to Stop the Bleeding
• GOOG at $398? Clearly, You’re Dyslexic.
• WaMu: Epic Bail
• Ballmer: Better Safe Than Lehman Bros.
• Lehman Brothers: $2.5 Billion for a Bankruptcy Well Done
• Here’s $39 Billion in Recognition for Your Hard Work on the Forthcoming Financial Crisis
• Weekend at Bernanke’s II
• Weekend at Bernankes

Overhauling the country’s IT systems could cost as much as $250 billion to $300 billion over five to seven years, he said in an interview. In addition, he estimated that electronic health records will cost some $150 billion to $200 billion under the Obama administration’s health-care initiatives ($20 billion of stimulus funds have already gone toward the project).

Stronger systems might have mitigated last year’s economic turmoil, Mr. Ram said. “The subprime crisis started with poor controls at the loan origination process, which a halfway decent loan-origination system should have trapped,” he said. “The core systems are several decades old and written in outdated programming languages.”

That’s like blaming superhighways for traffic jams, said Andrew Bartels, an analyst at Forrester Research (FORR) who studies tech-spending trends.

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Jefferies enterprise software analyst Katherine Egbert thinks so. She issued about a flurry of research notes today, saying various nice things about the improving climate, lifting targets and estimates for an assortment of stocks.

Egbert writes that a survey of IT security software resellers found signs of a pick-up: she writes that on average the 71 VARs surveyed now see 2009 spending up 9 percent, up from 7 percent in a comparable survey one quarter earlier. She writes that Q4 should show “a strong budget flush,” with a small majority expecting higher year-over-year sales in the quarter.

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That’s the word from Gartner, which back in March was claiming the decline would be just 3.8 percent. The research outfit said Tuesday that it expects tech spending to fall to $3.2 trillion this year, down from $3.4 trillion in 2008. And it sees all four major segments of IT–hardware, software, IT services and telecommunications–suffering revenue declines in 2009 (click on chart below).

“The forecast decline in spending growth for the hardware and software segments in 2009 has almost stabilized, and only minor downward revisions have been made to these forecasts this quarter,” said Gartner’s Richard Gordon. “However, the full impact of the global recession on the IT services and telecommunications sectors is still emerging, and forecast growth in these areas has been further reduced significantly.”

That said, the company sees a rebound of 2.3 percent in 2010.

Gartner (IT) is the latest research firm to temper its projections for information technology spending this year in light of the ever-souring economy. Last week Forrester (FORR) lowered its expectations for 2009, saying the first two quarters of the year were worse than expected and that the decline will carry out for the rest of the year. It did, however, say we can expect a rebound in 2010.

“Due to the current macro-economic conditions and limited visibility, EMC is not offering revenue, EPS or other financial outlook at this time, the company said in a statement. “EMC’s best estimate is that 2009 global IT spending will decline as a percentage in the mid to high single digits compared with 2008. The company expects the markets that it addresses will perform slightly better than the overall IT market. The company also expects that a higher than usual percentage of the full-year IT spending will take place in the second half of the year.”

Enterprise technology spending grew seven percent in 2007, according to a new report from Forrester Research (FORR). Spending grew 4.1 percent in 2008. And it was expected to grow 6.1 percent in 2009. But with information technology departments steeling themselves against the economic downturn, that’s no longer the case.

In 2009, enterprise tech spending will grow not 6.1 percent, but 1.6 percent, hamstrung by a cautious reprioritizing of buying habits. Now that’s far better then the 15 to 20 percent decline in tech spending that occurred in the 2001/2002 downturn, but it’s ugly nonetheless. A few bullets from the Forrester report:

• Computer equipment purchases will fall 3.1 percent in 2009, on top of a decline of 0.4 percent in 2008.
• Communications equipment growth will slow to 0.8 percent in 2009.
• Software purchases, which grew 5.8 percent in 2008, will slow to 3.4 percent in 2009.
• IT consulting and systems integration services will weaken. Growth will be 4.1 percent for 2008 and just 2.2 percent for 2009.

Disconcerting metrics, to be sure. As Forrester aptly notes, “The question for the U.S. tech market is no longer whether the U.S. economy is in recession–instead, it is how long and deep the recession will be and how much damage will it do to the tech sector.” The research outfit optimistically suggests that the recession will last into mid-2009. Hopefully, that prediction will prove true. Because if it doesn’t, the alternative view is frightening indeed. Says Forrester, “The most likely alternative to our assumption of a four-quarter U.S. recession is a deeper and longer recession that lasts five to seven quarters. The causes of a nasty and persistent recession of this kind would be the downward spiral of consumer and business confidence, which feeds further declines in the housing market and business investment, which cripples the financial sector and leads to more cutbacks in consumer and business confidence.”

Really? Leaving aside for a moment the fact that Microsoft already has a mobile OS in Windows Mobile and the fact that RIM’s client architecture is, you know, based on Linux, wouldn’t a merger between two of the largest players in the smartphone market invite antitrust scrutiny?

Last night, the company posted results for its fiscal second quarter ended July, which beat the Street impressively on the top line, but at the cost of lower-than-expected gross margins, resulting in a miss at the EPS level. The Street commentary this morning is mixed: Quite a few analysts contend this is a temporary issue, that the company knows it got overly aggressive on pricing in Europe generally–on notebooks in particular–and can fix the issue quickly. But others contend that Dell’s turnaround has taken a giant step backward. They worry that there is more trouble ahead and note the company’s warning that IT spending is showing signs of slowing not only in the U.S. but also in Europe and some countries in Asia. The results didn’t change a lot of minds on the stock overall; the one downgrade of the stock I spotted came from Standard & Poor’s analyst Tom Smith, who cut his rating to Hold from Buy, asserting that with “unsteady margin patterns” likely to continue, it is time to “take a less aggressive stance.”

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