All IT surveys aren't created equal. I give Goldman Sachs more weight than most of its rivals, including JMP Securities (a boutique investment bank), and some of the lesser-known research shops. But when Goldman, JMP, and now ChangeWave, (one of the aforementioned second-tier research firms) all get on the same page, you have to pay attention. Surveys by the three organizations indicate that the credit crunch an Surveys by the three organizations indicate that the credit crunch and fears of a possible recession have convinced IT execs to rein in spending in 2008, with the software sector taking a significant hit. In the most recent survey, JMP analyst Patrick Walravens downgraded Oracle after finding 61 percent of the 38 companies he surveyed expect their software spending to be flat or down in 2008. And in a rather unsettling aside, he said, “We think Oracle can find ways to save money to protect its earnings per share. We expect to see some reductions in the sales force as well as other cost-saving measures.” Granted, 38 companies, even if carefully selected, comprise not much of a sample. But JMP has been conducting the survey for seven years, and according to Walravens, the result is the worst since 2001 “and is similar to the result in May 2003, which marked the beginning of a two- to three-year choppy period for Oracle’s business.” The JMP survey has done a decent job predicting Oracle’s results. In the 10 months following the 2001 survey, Oracle’s stock price dropped from $15 to $8. After the May 2003 survey, Oracle’s stock traded up and down as it made the May 2003 quarter, missed the August 2003 quarter, made the November quarter, and then missed the February 2004 quarter. “We would not be surprised to see this type of uneven performance in our software universe until the U.S. economy regains its footing,” the analyst wrote.Walravens also downgraded Ariba for similar reasons. And while shares of Oracle slipped just a bit, Ariba fell more than 5 percent following his note. (By the way, Cowen analyst Peter Goldmacher had a different take on Ariba, saying that the company would actually benefit from a modest economic downturn, since it sells itself as a resource to help companies manage procurement spending.) The JMP survey comes a few weeks after Goldman Sachs sampled a much larger group of companies and found similar, downbeat results. “We are reducing the estimates of most of our covered companies, focusing on pure-plays that could be harmed as customers seek to purchase ‘good enough’ substitutes from larger vendors, as well as vendors who sell ‘big ticket’ items that could be delayed in a slower spending environment,” analyst Sarah Friar wrote in the report.On a more positive note, Friar said that companies selling SaaS (software as a service) would likely do better. “The ability to quickly and easily turn on new applications with a significantly lower initial cost of ownership makes SaaS an attractive offering for small and midsized businesses, significantly expanding the market for software applications.”ChangeWave sampled more than 1,900 companies and said, “Projected IT spending growth looks anemic for the coming quarter compared to the robust seasonal increases we normally see at this time of year. Simply put, this is unusually bad visibility for IT spending.” I have a quarrel with that conclusion. I’ve often seen spending slow down in the first quarter, following a fourth-quarter budget flush. But the fact that sentiment in so many companies is more negative than usual for this time of year gives ChangeWave’s conclusion some weight. We’ll get a change to hear real numbers from Oracle on Dec. 19. The results for the quarter will likely be good, but Wall Street will be very interested in the company’s outlook for the next three months. Rate cut could change the game As I write this post on Wednesday, the market is making a strong upward move, after two down days. The reason is two-fold. There’s more and more confidence on Wall Street that the Federal Reserve will cut interest rates. Moreover, there is some good economic news buoying the market.As I wrote last week, the potential rate cut is dominating the thinking of investors right now. The market is counting on a cut of at least one-quarter of a point and that news is essentially priced into stocks at this point. A half-point cut would obviously be welcomed with a rally, while a stand-pat stance would makes things ugly in a big hurry. Stay tuned.I welcome your comments, tips, and suggestions. Reach me at bill.snyder@sbcglobal.net. Technology Industry