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» VIEW ALL POSTS Oct 1 2008   8:10PM GMT

Wall Street woes a problem for IT vendors



Posted by: Shamus McGillicuddy
Tags:
Network

The financial crisis that the United State is mired in is starting to feel like a never-ending earthquake. The ground is shaking beneath all of us and we’re wondering when it will end.

Watching Wall Street go into a meltdown is probably especially unnerving to the IT vendors who provide the infrastructure to companies that have ceased to exist, such as Lehman Brothers.

Bloomberg reported recently that IT spending by financial firms could decline by $4.3 billion next year, the lowest level since 2000. Does anyone remember the year 2000? That was the year the dot-com bubble burst, sending the IT sector into a long tailspin. Everyone has horror stories to tell about those years of companies closing their doors, IT pros losing their jobs and stock options going up in smoke.

The merger of Merrill Lynch and Bank of America alone will result in nearly $2 billion in IT spending cuts. Since that deal went down, JP Morgan Chase & Co. has bought out Washington Mutual and Citigroup bought out Wachovia’s banking operations, which will surely cut into tech spending in this market even further.

Some of the bigger vendors on the market should be able to weather this storm. According to Bloomberg, Cisco System derives just 3% of its revenue from the financial sector. Other smaller vendors are probably more exposed than that. Now more than ever, when shopping for new technology or managing existing vendors, it’s important to know how financially sound they are.

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