Spending Bounce Eludes Big Tech Firms

Tech's go-to names are stuck on the bench as big business learns a new playbook.

Wall Street has spent four long years waiting for information technology spending to bounce off the deck. Recovery hopes have only grown stronger this year as big-name CEOs filtered some optimism into their cautious economic outlooks.

But some observers say investors awaiting a revival in the likes of Cisco (CSCO Quote) and Microsoft (MSFT Quote) should stop holding their breath. These analysts say the business-technology game has changed so much that what is commonly thought to be a brief pause in capital spending may actually mark a lasting drop.

In the last boom, companies felt pressured to put their businesses on the Web to stave off competition. That meant lots of spending on new gear and software. But now many corporations aren't hearing those footsteps, and a surplus of existing technologies means that workable solutions to various problems can be had on the cheap. All this comes at the expense of growth and profit margins at the big tech companies that drove the 1990s tech frenzy. ...