If you're having a tough first quarter, you're not alone.
IT shipments through distributors on a global basis will decline 19.4 percent compared to the year-ago quarter, according to Raymond James & Associates' IT Supply Chain First Quarter IT Demand Survey.
Sales also are expected to be off a seasonally weak 19 percent from the fourth quarter, according to Raymond James.
"Double-digit currency headwinds and a steeper than normal decline in ASPs exacerbated the weak economic backdrop. On a constant currency basis, we estimate global IT shipments to be down 12 percent to 13 percent," wrote Brian Alexander, managing director of equity research for technology hardware, distribution and EMS at Raymond James.
Geographically, no region was spared, according to the firm. Raymond James forecasted North American shipments through distribution to decline by 18.1 percent compared with last year, while European and Asian shipments are estimated to decline by 26.7 percent and 10.2 percent, respectively.
The North America decline was significantly worse than the 2008 fourth quarter, which saw sales through distributors decline 8.1 percent compared to the fourth quarter of 2007.
Surprisingly, shipments through SMB-oriented resellers fared worst, according to Raymond James. SMB sales declined 19.1 percent. "Until the past six months, SMB outperformed large account sales. The public sector fared best, declining by an estimated 6.7 percent vs. last year," Alexander wrote.
Overall, domestic shipments to resellers are expected to be off 14.2 percent compared to the first quarter of 2008.
"It is the macro-economic environment that is suppressing IT spending. More specifically, it is lower corporate profits and limited availability of credit, both of which are leading indicators of IT spending," Alexander wrote.
Further back in the supply chain, demand trends also are weakening as shipments for EMS, power semiconductors and PC-centric semiconductors are expected to decline by 18 percent, 37 percent and 32 percent, respectively, according to Raymond James.
"An increase in component inventory days at year end helps to explain the steeper decline in component and semiconductor shipments," Alexander wrote.
While the 2001-02 dip in IT spending was due to excess spending prior to Y2K and the dot-com bubble burst, this recession is different, Alexander wrote.
"Consequently, we believe that the timing of a recovery in tech spending has everything to do with corporate profits and credit as opposed to working off excess capacity, which was the case in 2001," he wrote.
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