Government spending on electronics ticked up in September as the public sector stocked up on new computers, cloud services, and applications, Barclays says in a note out today.
But analyst Ben Reitzes is worried that some of that momentum will fade headed into the fourth quarter and 2012. Four major tech firms will report earnings for quarters that end in October, offering the first glimpse into public spending on IT.
Reitzes is looking specifically at:
Dell: Public sector purchasing accounts for 28% of Dell’s net sales, as schools and governments rely heavily on the PC giant for technology needs. Reitzes believes that public revenues were up during the quarter ended this October, but that momentum will not carry through into 2012.
NetApp: The company’s online storage business may drive revenue as government spending fuels 28% expected quarter-on-quarter growth. Federal spending on cloud computing is driving the resurgence at the company, which takes 15% of its sales from the U.S. public sector.
Tech Data: Unlike other firms in Reitzes coverage universe, Tech Data takes most of its revenue from Europe. Though the company is not severely exposed to southern countries like Italy and Greece, when it reports earnings analysts will be looking to see how demand in the continent held up, and what, if any, guidance the company offers.
Hewlett-Packard: HP, like Dell, is a big public supplier through its printer and computer businesses. However, analysts will most likely be interested (beyond questions into new CEO Meg Whitman or the Autonomy acquisition) in international demand, where the company takes 65% of its revenue. Though guidance will be lowered, as Whitman uses the period as a restart year, any visibility of Europe in 2012 will be taken as a leading indicator for sales elsewhere.
Dell reports on November 15, followed by NetApp on the 16th. Both Tech Data and Hewlett-Packard will announce on November 21.