Things are looking up in 2004, says Dan Niles, one of the most unshakable predictors of a protracted downturn since 2000. Now he says all the signs are there for a prolonged upturn in the market.

Niles, a former Lehman Brothers analyst, who now runs investment firm Neuberger Berman Technology Management, said the same factors that were in place after the downturn of the early 1990s are in play now.

"In Q4 of 2000 we saw the beginning of trouble with excess inventory and orders slowing," said Niles, who built a chart documenting the various phases of the downturn and presented it at the Oracle High Technology Summit here today. That chart shows that IT demand bottomed out in Q3 of 2002 and that the European IT market bottomed out the following quarter.

He said that following the Iraq war in Q1 of last year and the SARS outbreak in Q2, the market experienced two times normal PC growth in Q3 and a rebound in the wireless handset market. Last quarter, he said networking and large enterprise sales picked up.

Niles predicted that in 2004, all major end markets and global economies would contribute to growth.

"This is going to be a really strong period of growth," he said. "It will be slower than in the past, but it will last a long time."

He noted that IT growth typically runs about two to three times GDP growth, and that it started rebounding as soon as corporate profits were in positive territory.

By: DocMemory
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