Solution Providers Buck Economic Downward Trend

IBM

"My business was up 37 percent in the first quarter compared to a year ago," said John Sheaffer, president of Sysix Technologies, Westmont, Ill. Sheaffer cited strength in consulting, server consolidation, middleware and in Sysix's leasing business. "We have a month and a half backlog of closed business. We're attacking the market," he said.

"Business is hotter than hell," said Joe Vaught, COO of PCPC, Houston. "We're running 12 times what we were running last year. It's Linux clusters and it's all IBM gear. Everybody is buying Linux,movie [studios for animation, petrochemical for stack migration, fighter pilots [defense industry for design and airflow. [Linux clusters are cheap mainframes."

That fiscal outlook is in sharp contrast with IBM's, which said Monday it would not meet Wall Street's expectations for its first-quarter earnings. The company cited a continued depressed market and a big loss in its Technology Group as reasons for not meeting expectations.

The company said it expects its first-quarter profit to be in the range of 66 cents to 70 cents per share, down from the anticipated 85 cents per share Wall Street had been projecting.

Wall Street also had an average estimate of $19.7 billion for IBM's first-quarter revenue--a number the company said it would also fail to meet. The company said it expects sales of between $18.4 billion and $18.6 billion.

IBM CFO John Joyce said in a statement that IBM saw a slowdown in buying decisions during the first quarter.

Specifically, IBM said its Technology Group--which includes IBM Microelectronics as well as other component makers--would turn in a $200 million loss for the quarter.

Some IBM solution providers share IBM's pain. "It's pretty bleak," said Pat Kelly, president of Conservor, an IBM solution provider in Sugar Land, Texas. "Companies are still not cutting loose their IT budgets."