WALL STREET Tumultuous techs may see boost from IT spending, analyst says

Businesses are planning upgrades as the economy recovers.
NEW YORK (AP) -- When Advanced Micro Devices announced its fourth-quarter earnings earlier this week, the semiconductor company posted its first profit in two years, reported near-record sales and topped Wall Street expectations by an impressive 8 cents per share.
The stock went from $17.38 on Tuesday, right before the company released the good news, down to $15.32 at the close of business Friday. The cause: a tepid outlook for the first-quarter, a seasonally low quarter for chip makers.
After a year of strong gains in technology -- and especially in the semiconductors that power personal computers and a variety of other electronic gadgets -- investors feel stocks such as AMD and rival Intel Corp. are overvalued. They're also facing corporate outlooks that appear bland for at least the first quarter of the year.
Upgrades planned
Yet there's still hope. As the rest of the economy recovers, many businesses will begin upgrading their older technologies, some of which are left over from the Y2K scare and are overdue for replacement. That means more workstations, more laptops, more phones -- and more semiconductors.
According to Barbara Gomolski, an analyst with the technology think tank Gartner, spending on information technology could rise about 5 percent in the coming year. While not a huge jump, it represents the first overall increase in IT spending in two years.
"The trend line is moving up, and that's good news," Gomolski said. "You're starting to see some replacement spending that had been postponed for a few years."
Spending on the so-called "big iron" of IT -- large servers that manage networks and Web sites -- is still likely to be flat, but smaller items such as handheld computers and laptops are high up on the shopping list for many companies.