These days, investors who listen to tech CEOs might be tempted to collapse in a sobbing heap on their bar stool. Top tech executives are starting to sound resigned to the prospect of yet another lousy year in 2003.

Yet Wall Street, which has in recent years become a sort of asylum for optimists, hasn't yet come to terms with that shift. That means investors are likely to see still more painful cuts in profit forecasts.

Astonishingly, analysts are currently betting that

S&P 500

tech companies will post earnings growth of 40% in calendar year 2003, according to figures from Thomson Financial/First Call. The tech group includes computers, semiconductors, chip equipment and software.

Granted, that growth would come off a depressed base -- this year, profits are expected to grow by a meager 5%, after falling 62% in 2001. But given the recent gloom from tech management, that outlook still appears to be way on the hopeful side.

Wednesday, a top executive at computer hardware vendor

Hewlett-Packard

(HPQ) - Get Report

told

Reuters

that the company no longer expects to see a pickup in spending next year.

"I think nobody is counting on a recovery in 2003 now. Lord knows we'd like to see it happen in the second half of the year and some think it may happen," a report quoted Michael Winkler, H-P's head of global operations, as saying.

But Winkler said customers have told H-P their spending plans are flat.

Another computer outfit, Europe's

Fujitsu-Siemens

, also said Wednesday that it doesn't expect a strong recovery in the IT market next year, according to a separate

Reuters

report. The company's CEO said he expects the industry to see only slight improvement in 2003.

In a similar vein, last week the head of

Network Appliance

(NTAP) - Get Report

, a data storage company, said he expects IT spending might show signs of recovery in 2003, but likely will not fully recover until 2004.

Kicking off the recent stream of confessionals, in late August, Sun CFO Steve McGowan warned that IT spending not only had failed to improve, but appeared to be getting worse.

Herd on the Street

Granted, Wall Street analysts already have lowered their expectations for some tech subsectors. Currently, the '03 outlook for leading computer hardware companies assumes meager to no growth. Analysts expect H-P to improve sales by only about 2% in its 2003 fiscal year ending next October, according to Thomson Financial/First Call.

Struggling

Sun Microsystems

(SUNW) - Get Report

should see virtually flat revenues for its '03 fiscal year ending next June.

Meanwhile,

IBM

(IBM) - Get Report

is expected to show only 5% growth in calendar year 2003 (though that growth looks more impressive, factoring in a sales base estimated to reach nearly $80 billion this year).

But in other areas of technology, expectations seem less realistic. Sexy outposts like storage and communications chips still are slated for robust double-digit growth. Though that's occurring from a small base, it's starting to look like forecasts are overly hopeful.

Even some analysts say Wall Street's expectations are out of whack. "Consensus estimates for most companies in our universe still appear excessively optimistic, leaving significant room for downward revisions," wrote Jason Ader, a data storage analyst at Thomas Weisel, in a note issued this week.

Ader cites "mounting evidence that the expected pickup in IT spending 'next year' now means 2004 instead of 2003," noting that storage area network revenues are likely to grow only 6% this year. He brought down his growth forecast for storage area network switches from 25% to 16% over the next year.

Likewise, Lehman analyst Dan Niles recently pointed out that '03 estimates of 20% growth for programmable logic device vendors

Xilinx

(XLNX) - Get Report

and

Altera

(ALTR) - Get Report

are unrealistic, given that their biggest customers are expected to see virtually no sales growth themselves. Sales forecasts north of 30% for

Applied Micro Circuits

(AMCC)

and

PMC-Sierra

(PMCS)

likewise

seem on the high side, in light of their struggling customer base.

So, given the blunt pessimism issuing from companies themselves, how to explain Wall Street's reluctance to slash numbers? To be fair, mixed messages lately from the economy have mystified plenty of very smart people. And without knowing where the economy's going, it's tough to suss out the outlook for technology spending.

But it's also true that analysts seem occupationally predisposed to acting in tandem. For that reason, Ader says he purposely ignored consensus numbers in arriving at his own estimates. He wanted to avoid what behavioral finance experts call "anchoring" -- the tendency to be influenced by existing expectations. When anchoring takes place, analysts are apt to underestimate the relevance of additional news about a company, for good or bad, because they've already formed an opinion.

While this may sound like an academic issue, the herdlike tendencies of Wall Street can hurt on the down side. And given that analysts are likely to have to start taking down '03 numbers in earnest, that means the painful market losses may not be finished.