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Amazon forecast shows boom time is over for IT sector

Arlene Martin
www.Amazon.com's lowering of its sales and profits forecasts has been described as a sign that e-business spending is reaching "maturity" after exceptional growth.

Arlene Martin

Richard Holway, a director of Ovum Holway, said, "People should expect to see similar profit warnings and profit revisions in the future. This reflects a slowdown in IT sector spending, which started last year and which is going to continue."

Releasing its fourth-quarter of 2000 results yesterday, the world's most famous e-tailer lowered its sales forecast for 2001 by 10%, from $4bn (£2.73bn) to between $3.3bn and $3.6bn. The company expects to reach profitability by December 31 2001.

Holway added, "I believe that the growth rate of the IT industry will now be expressed in single digits. The industry is in for a lean time. It is a mature industry now, so there is no reason why it should operate any differently from the rest of the economy. IT cannot continue to grow at the rate it has done in the past since to do so would be to defy gravity."

However, he maintained, "It is a good industry to be in."

Amazon reported losses in the October to December 2000 period of $90.4m on sales of $972m. Last year's losses for the same quarter were $184.9m. In a bid to reduce its operating costs and reach profitability, Amazon announced that 1,300 US staff would lose their jobs.

Internet firms AltaVista, DoubleClick and eBay have all announced redundancies in recent months.


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