Goldman trims 2012 global tech spending forecast

Goldman Sachs trims its global technology spending forecast to 3 percent from 4 percent for calendar year 2012 after its June annual survey of the industry.

Goldman says expects lower GDP growth in advanced economies and a lower global fixed investment forecast.

Investment bank says survey results consistent with its views for modest fiscal 2012-13 earnings for Indian IT services large caps: forecasts 10 percent U.S. dollar revenue growth vs 18 percent in fiscal 2012 ended in March.

Goldman prefer HCL Technologies, reiterates buy rating, on expectations for better growth and revenue after $2.5 billion in deals over the past six month.

Adds HCL Tech trading at a 22-23 percent discount to its eight-year historic average and other large caps.

• Nielsen: Android Nears 52% Market Share for U.S. Smartphones

New research from Nielsen indicates that Android products now account for more than half of the smartphones in use in the U.S. market, and that 54% of those who purchased smartphones in June 2012 opted for an Android device

The market research firm said that smartphone market penetration, in general, continued to grow in the second quarter of 2012, accounting for about 55% of U.S. mobile device users. This trend is a product of the rapid rate at which American consumers are purchasing smartphones -- which have accounted for 2 out of 3 mobile phones bought during the past three months.

A little more than half of the smartphones purchased during that time period were Android devices, 51%. Roughly 1 in 3 -- 34% -- were iPhones, while just 9% were BlackBerries.

The overall market shares in the smartphone sector look roughly the same -- Android, as mentioned, is the platform leader, with about 52% of the market, iOS is in second place with a little more than 34%, and BlackBerry accounts for 8%. (Windows Phone and other operating systems make up 5.9% , according to Nielsen.)

The picture could well change within the next several months, however, as major movements in the mobile sector take shape -- Apple is believed to be planning the release of the iPhone 5 sometime before the end of the year, though this is, as yet, mere speculation, while legal turmoil hampers Android device makers and BlackBerry maker RIM continues to fight rumors of its coming demise.

HP's $600 mln GM services deal at risk

General Motors’ decision to bring much of its information technology work in-house threatens an IT service deal worth some $600 million a year to Hewlett Packard Co, two sources with knowledge of the matter told Reuters.

It is unclear how much of the HP agreement would be affected. But the GM contract is one of the bigger contracts at the IT company, one of the sources said, adding that the loss of a significant amount of that business would be a “big deal.”

The sources spoke on condition of anonymity because the details of the arrangement are private.
HP and GM both declined to comment.

The Detroit carmaker is a major client of HP, which has provided technology services and support to GM for a quarter-century.

GM said this week it now plans to handle most of its own IT needs internally, completing the transition within three to five years by hiring thousands of software developers and replacing its outsourced work.

HP revealed in July 2010 that it had bagged a multi-year, $2 billion services agreement with the carmaker, which outsources some 90 percent of its IT needs.

The world’s No. 1 PC maker now manages GM’s technology infrastructure including providing applications development and management services for product development, manufacturing, business services, and supply chain.

GM’s automotive division alone accounts for $350 million annually in IT services business for HP, the source said, adding that HP also sells a lot of its products and other related services to GM. The $600 million figure does not include that portion of HP’s work with the company.

The automaker also outsources technology-related work in its OnStar division, a contract that is separate from the IT services deal the two hashed out, and one that GM may find difficult to unravel, the second source said. Onstar is GM’s in-car navigation and communications system.

HP has been staving off slowing demand for personal computers by moving aggressively into helping corporations manage hardware, software, and networking and storage. But in these areas it has to cope with stiffening competition from the likes of Dell Inc and IBM.

Its Services business generates $36 billion annually. So while a potential loss of a good portion of GM’s business would hurt the company, it is not devastating.

Still, the news comes at a bad time for HP as the company is trying to jumpstart growth while analysts warn of deep technology spending cuts by corporations in the second half of the year.


GM’s IT transformation is being led by Chief Information Officer Randy Mott, who oversaw a global restructuring of HP’s IT operations while he was CIO at the Silicon Valley company.

Mott, who joined HP in 2005 under then-CEO Mark Hurd, was one of the many executives who left HP last year during former Chief Executive Officer Leo Apotheker’s short-lived regime.

HP acquired a lot of GM’s business through its purchase of Electronic Data Systems Corp, the Texas-based technology outsourcing company, in 2008 for $13.9 billion. EDS was previously owned by GM, one of the pioneers in outsourcing, for more than a decade before it was spun off in 1996

India, US close to inking over USD 600 mn jet engine deal

India and the US are close to signing a deal worth over USD 600 million for supplying 99 jet engines that would be used in the indigenous Light Combat Aircraft 'Tejas' being developed by the DRDO.

Around two years ago, India had selected the American company General Electric over its rival European Eurojet 2000 for the LCA Mark II programme expected to be ready around 2014-15.

Negotiations with the US firm over various issues involved in the deal, including price and transfer of technology, have been held and it is hoped that the deal for these engines to be fitted on the LCA Mark II would be signed soon, Defence sources told PTI here.

As per the contract, the order could be for 99 engines initially but India will have the option of order for another 100 engines in the future.

The engine on offer for the LCA Mark II is GE F-414 engine, which are more powerful that the GE F-404 engines fitted in the first batch of LCAs that the Indian Air Force would receive in near future.

The need for changing the existing engines in the LCAs was felt after the IAF found out that the GE-404 engines were not providing enough power to the aircraft and more powerful engines were needed for the purpose.

The DRDO is developing the LCA Mk II to meet the Indian Air Force requirements and it will have latest technological equipment including the latest Active Electronic Scanned Array (AESA) radar and would be able to carry more payload than the LCA Mk I.

Last month, the trials of the LCA Mk I were carried out in Pokharan desert firing range where laser-guided bombs and other weapon systems were tried.

As per the current plans, the IAF will induct two squadrons of the LCA Mk I and then the delivery of LCA Mk II aircraft would done.

China's economic woes to continue: Wen Jiabao

BEIJING: China's economic woes that have brought growth to a three-year low will continue for some time, but the slower expansion remains within expectations, PremierWen Jiabao says.

Wen said Chinese need to recognize the seriousness and complexity of the challenges the country faces. But he added that China's economic fundamentals remain favorable, even if the economy hasn't fully stabilized.

``At present, our country's economic growth rate remains within the target range set earlier this year and we are seeing the effectiveness of stabilization policies,'' Wen said during a tour of the southwestern city of Chengdu on Saturday. His remarks were posted Sunday on the central government's official website.

``However, we also need to soberly see that the current economy has not yet formed a stable recovery and the economic difficulties may continue for some time,'' he said.

The government will prioritize job creation and provide financial aid and tax breaks to companies suffering from slowing exports due to sinking overseas demand, Wen said. Private investment will be encouraged and the government will promote industrial upgrading and urbanization to spur consumption, he said.

Wen, the country's top economic official, has previously promised more bank lending and other aid to small businesses that generate most of China's new jobs and wealth.

``All regions and departments need to proceed with even greater determination and courage,'' Wen said.

His comments follow the government's announcement Friday that the world's second-largest economy grew by 7.6 percent in the three months ending in June over a year earlier. That was the lowest since the first quarter of 2009 during the depths of the global financial crisis.

Growth was down from the previous quarter's 8.1 percent, damping hopes that China can make up for U.S. and European weakness, but in line with the government's official target of 7.5 percent for the year

Private-sector forecasters say the economy may have bottomed out during the first two quarters and China still is likely to achieve its target for the year.

Export growth has fallen and consumer spending weakened despite stimulus measures including two interest rate cuts since the start of June. The government also is pumping money into the economy through higher investment by state-owned industry and more spending on low-cost housing and other public works.

However, Beijing is moving cautiously after its 2008 stimulus pushed up inflation and spurred a wasteful building boom. Authorities have said curbs imposed on building and home sales to cool surging housing prices will remain in place.

Other indicators announced Friday suggested the low point of the recent decline might be past, especially strong June bank lending, which is closely tied to business activity.

June retail sales growth declined to 12.1 percent adjusted for price changes, down from the previous month's 13.8 percent growth. Growth in factory output edged down to 9.5 percent from May's 9.6 percent.

In a reflection of efforts to spur the economy with higher investment, growth in spending on factories, real estate and other fixed assets accelerated to 23.2 percent in June from the previous month's 20.1 percent.

HP sets up cloud data center in Bangalore