Tech Wares Lose Momentum

After strong gains earlier this spring, the value of factory orders for computer products fell 0.6% in May, despite a 0.4% increase in overall factory orders, according to the Commerce Department.

The value of computer shipments plunged 11.2%, with shipments of storage devices and peripherals off by 1.8% and 2.9%, respectively. Inventories, which were down 0.1% overall, rose 0.8% for computers and related products. Higher inventories often mean people aren't buying goods as fast as vendors had expected they would.

Hesitancy among business buyers to invest in IT because of the aftereffects of the Iraq war continued into May despite predictions of an IT shopping spree when the conflict subsided. "People who first looked for an early recovery tend to vacillate when they see that sales and profitability figures don't give them clear signals on the direction the economy will take," says ForecastCenter.com president Irving Leveson.

Adding to U.S. IT makers' woes, he says, is a weak economy overseas, including Asia, where SARS discouraged companies from investing heavily.