With yet more clouds gathering over the global economy, software firms are facing a "category 5 spending storm," according to analysts who lowered their estimates on some of the sector's key players Wednesday.
Virtualization pioneer VMware (VMW - Get Report) and security giant Symantec (SYMC - Get Report) are just two of the big-name vendors sailing into choppy waters, warns Jefferies analyst Katherine Egbert.
VMware, which was the darling of the tech sector when it completed its $1.7 billion IPO just over a year ago, now joins other firms scrambling for a share of the sluggish software market.
"Our September quarter-end checks indicate substantial spending weakness in markets around the world -- we don't expect the headwinds to abate until mid-2009," writes Egbert in a research note. "While domestic and some international government spending seems to be holding up, there are degrees of trepidation in nearly every vertical and geography."Because software licenses offer a recurring revenue stream, vendors have typically been less vulnerable to spending downturns than their hardware counterparts, although customers are now changing their buying habits. "Even the normally staid, recession-proof security sector seems to be taking on some water," writes Egbert. "Our checks with over 60