Tech outlook mixed after first round of results

By Philipp Gollner - Analysis

SAN FRANCISCO (Reuters) - Mixed quarterly results from some of technology's biggest players this week suggest at least some parts of the industry may not prove the safe haven investors hoped to find.

Turmoil in the U.S. credit and housing markets caught up with IBM, the world's largest technology services company, and may have crimped third-quarter sales growth of personal computers in the United States.

But strength elsewhere, especially in Europe and Asia, helped some U.S. technology companies overcome weaker demand at home, while strong foreign currencies gave overseas results a boost in dollar terms.

The Standard & Poor's Information Technology index is still up 20 percent this year through Thursday's close, the third-best-performing sector after energy and materials. It is the S&P 500's top performing industry index so far this month.

But a raft of earnings this week suggests technology's luster may be fading in some areas, particularly in the United States and in demand from business customers.

"Tech is not immune to a downturn in an industry or the global economy overall, although it is the only thing in the long term that will increase a company's productivity," said Kim Caughey, senior analyst at Fort Pitt Capital Group, which manages about $1.2 billion, including IBM shares.

"When companies run into trouble in their own business, they stop capital expenditures," Caughey said. "And in this instance (of IBM), where banks and insurers are huge users of transaction technology, it should give you pause whenever you see an industry going down."

Credit and housing troubles held back revenue growth at International Business Machines Corp as it said that financial customers delayed purchases of mainframe computers. Foreign exchange gains boosted revenue significantly, dampening some investors' enthusiasm about IBM's growth prospects.