NEW YORK (TheStreet) -- Even with all the brouhaha surrounding Apple's (AAPL) - Get Report Tablet launch and IBM's (IBM) - Get Report recent profit boost, these are still strange times for technology stocks. While research firm Gartner predicts that IT budgets will essentially be flat in 2010, it also says that worldwide IT spending will grow 4.6% in 2010.
Who's poised to benefit: firms that play within the
sectors, or providers of technologies that can be implemented quickly and without significant upfront costs. While this spells good news for companies like
and Apple, there are also other niches primed for growth.
Healthcare will be big, thanks to the American Recovery and Reinvestment Act, which has earmarked $19.5 billion for health IT. President Obama has also vowed to implement electronic medical records in hospitals, clinics, and doctors' offices by 2014.
"Some areas are experiencing growth
and lots of it," said Rafi Musher, CEO of Stax, a management consultancy that works with private equity firms. (Stax is alluding to the President's
plans.) "I would rather be a sales guy selling computers to healthcare IT companies than selling computers into the automotive sector."
Musher says that at the moment, companies are looking for the "fast payback" of software services in areas such as workforce management -- like internet-based cloud services and virtualization tech -- over large, complex deployments of technology. "People are finding work-arounds to get enhanced performance," he told
. "Software services that improve productivity quickly should see a boost."
There have also been signs that companies are spending money on their networks.
Data center specialist
-- not one of tech's biggest names -- says that it is already reaping the benefits of the recovery, something that could
F5 enjoyed a revenue hike of 9.2% in its recent first-quarter results, and CEO John McAdam told
that the networking recovery is well under way. "At the end of March we started to see things getting better," he said. "It was a ramp that continued to accelerate into the December quarter."
However, for much of the technology sector, the story looks more grim. Tech bellwethers like IBM,
, which recently posted
, also saw a rapid
as investors continue to cautiously eye the horizon.
I'm not finding people with budgets now like they
had in 2006 and 2007," said Stax CEO Musher. "Recoveries take time."
Musher adds that because budgets for 2010 were written in 2009, there is an inevitable degree of caution about this year's tech spending. While tech spending is up marginally overall, a lot of firms are adopting a wait-and-see approach.
Even IBM, which gave
bullish 2010 earnings guidance
, saw an increase of only 1% on its fourth-quarter revenue over the same period last year and gave a convoluted sales forecast for the coming quarter.
Despite guiding his company to a strong fourth quarter, Intel CEO
was also cagey about an uptick in corporate spending during a recent conference call.
Intel's Paul Otellini talks bright ideas -- but keeps mum about customer spending -- at last month's CES.
"I don't know how it is going to play out," he said in response to an analyst's question about how customers will spend this year. "Our view in terms of what we have built into our model for 2010 is a normal seasonal year off a very good Q4."
Technology analysts acknowledge that many companies are still wary of throwing open their corporate coffers, even as the recession slowly disappears in the rearview mirror.
Forrester Research predicts that U.S. IT spending will grow 6.6% in 2010, but urges a cautious approach to the recovery.
"At this point, there will be a discrepancy between our forecasts of a good 2010 tech recovery and the 2010 budgets and spending plans that CIOs have put together," wrote Forrester analyst Andrew Bartels in a recent note. "After a recession, CIOs tend to be very cautious about their budgets, erring on the side of little or no growth in what they plan to spend."
Bartels explained that this same pattern was evident when CIOs were emerging from the last recession between 2001 and 2003, and said that the current situation will improve as evidence of a broader economic recovery becomes clearer.
"While the outlook is brightening for the tech market, most CIOs have not yet gotten that memo," he added. "They will be waiting for their CEOs and CFOs to report that the business is better than expected; when they will receive permission to move from the wish list to the to-do list."
2010 may be just a few weeks old, but it could take months before much of the tech sector feels the full impact of the recovery.
-- Reported by James Rogers in New York
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