Maybe it's more of a shift than a hard brake.
Despite all the shouting in recent months about slowing technology spending, a subtler message is beginning to emerge from some quarterly reports: While the growth of information technology, or IT, spending may be slowing, it's also shifting. And in some cases, the shift is leading to stronger sales.
Take the case of
, a lesser-known e-business software firm in San Diego that reported higher-than-expected earnings and revenue Wednesday for its fiscal third quarter, which ended Dec. 31.
On $156.6 million in revenue, Peregrine earned 15 cents a share. Analysts were expecting 14 cents a share on revenue of $154.5 million, according to
First Call/Thomson Financial
In Thursday trading, Peregrine finished regular trading up $3.56, or 15%, at $27.50, despite the
slump into the red.
Unlike executives at some
other software companies, Peregrine CEO Steve Gardner conceded that U.S. tech spending growth is slowing. But he attributed his company's gains to stronger growth outside of the U.S., as well as a shift in what customers bought.
"We are seeing a lot of turbulence in the market," Gardner said. "America was a little slow, but Europe was strong. And the products we have that are more focused on hard savings are starting to pick up nicely, while some of our other products that have shown growth over the last few years
during strong economic growth are starting to level off."
As an example, Gardner said his firm's Get.It! software, which helps employees locate the things within a company that they need to do their jobs, had tapered somewhat. But sales of its AssetCenter, FacilityCenter and Real Estate Portfolio Manager software, which help companies locate and manage their internal assets, had picked up.
"Get.It! is a great product for a growing economy, because it lets people get what they need right away, and in an expanding economy, time becomes the most important thing," Gardner said. "But on the other side of the growth curve, you get into people looking to drive savings. And that's what our other products do."
He added, "What I really think we're seeing is a microcosm of what's happening in the economy inside our mix of products."
Gardner isn't alone in seeing a shift in spending.
CEO Gary Bloom
a similar phenomenon when his company reported earnings Wednesday.
Yet Peregrine didn't raise guidance on its call, something that makes its stock's rise even more compelling. Some companies have been penalized for leaving guidance in place during the current reporting season.
Timothy Dolan, an analyst at
Deutsche Banc Alex. Brown
, said Peregrine's stock is benefiting from proof that it successfully integrated last year's
acquisition. Oh, and there's the fact that it trades at 31 times fiscal 2002 earnings, and 6.5 times fiscal 2001 earnings. Compared to a lot of other software companies, that's pretty cheap.
"It matters where your stock is at," Dolan said. "If you're a company trading at 15 times revenue, you'd better raise guidance. It's different if you've got a 45% growth rate and you're trading at six-and-a-half times sales." (He rates Peregrine a strong buy, and his firm advised the company on its Harbinger acquisition last year.)
But he also said the company's international exposure and diverse product line helps.
"Any time you have a tough IT environment, the bar gets raised," Dolan said. "In a potentially weak environment, companies will focus on how do they squeeze more out of the infrastructure and assets they already have, which is what Peregrine Systems does."
From its results, it appeared that it does it well, too.