While Gartner is predicting continued increases in IT investments despite an anticipated economic slowdown, technology provider CDW is expecting a U.S. IT market decline at a high single-digit rate this year and has reportedly laid off a large number of employees as a cost-cutting measure.
Last week, the company reported first quarter results that were below its expectations, which President and CEO Christine Leahy says reflect the economic uncertainty that led customers to spend more cautiously and prioritize mission-critical initiatives.
“This demand contraction resulted in first-quarter performance below our expectations,” Leahy said in prepared remarks released along with the company’s preliminary first quarter results. “Volume declines were most acute with our largest commercial customers and across transactional products. Solutions were more resilient, but performance also came in below our expectations. While these results were disappointing, the team executed well in a rapidly changing environment.”
In the same statement, Chief Financial Officer Albert Miralles said the company will take efforts to align its “fixed cost base” with the level of anticipated demand. Full year 2023 earnings are now expected to be modestly below that of 2022, Miralles said.
Gartner’s IT forecast vs. CDW Q1 Results
IT analyst firm Gartner has a much more positive view, forecasting global IT spend to rise 5.5% from 2022 due to large increases in software and services. CDW’s preliminary earnings statement did mention strong results in “high-value solutions and services,” but a shift in more cautious buying was significant.
However, Gartner is also predicting a decline of 4.6% in devices, which is a key part of CDW’s business. In fact, the company says in its 2022 earnings report that hardware sales made up about 76% of its total net sales in 2022.
The company’s “disappointing” first quarter comes after 2022, in which CDW reported record net sales of $24 billion, which were 14% higher than 2021 sales, according to an annual report on file with the U.S. Securities and Exchange Commission (SEC).
In the report, dated April 7, Leahy also touched on the uncertain macroeconomic environment looming in 2023, but not before disclosing that CDW nearly doubled the size of its technical team since 2020.
According to social media posts, most of the affected positions appear to be in sales and delivery. It is unclear how many employees were affected.
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