Tech Facing The Tight Cash Crisis

The credit crisis is resulting in slowdown in technology sales, according to the Wall Street Journal. This credit crunch is a much bigger problem than most people in technology realize.

  • Technology financing is estimated to top $88 billion or about 14 percent of the total amount spent on computer hardware and software in 2008, according to IDC.
  • Baytree Leasing Co., a company that provides some of this financing, says it has seen the default rate jump from 0.5 percent to 1-1.5 percent.
  • Nearly 20 percent of CIOs are delaying buying or outright canceling purchases, according to a survey by CIO Executive Council.
  • Most companies who provide credit to tech-buyers are in deep trouble. CIT Group, KeyCorp and others are taking write downs.

What this means is that companies like IBM (s IBM), Oracle (s ORCL) and Cisco Systems (s CSCO) will have to open up their coffers to provide vendor financing if they want to keep their revenues growing. If these giants are smart, they could put the credit crunch to their advantage and grow their market share at the expense of some of the less liquid competitors.