Thomas Weisel Research on 2009 IT budgets

As the calendar is about to turn to 2009, many of our software and IT hardware clients and VC partners will be wondering what is in store on the revenue front. Insight is on the way: Thomas Weisel’s Research team has reviewed the forecasts of a series of Infrastructure Software companies. Their findings might provide some visibility into how large corporate IT buyers will behave in 2009:

“Seasonality Greetings: Trimming Estimates to Reflect Enhanced 2009 Seasonality

In recent discussions with multiple industry contacts, concerns have been raised over the level of seasonality that will be experienced in calendar year 2009.

Given the level of economic turbulence, many organizations appear to be late in setting firm IT budgets – and even if they are set, approval to spend the budgets may be withheld until later in the year when management teams hope to get a better view into the health of their own business. As a result we looked into our models and found a few companies where we needed to account for additional seasonality, based on historical trends. Specific companies that we have adjusted estimates for are Citrix, Double-Take, Quest Software, and Symantec. While we believe if the economy stabilizes there should be a good Q4 budget flush in 2009, we did not generally include all of the reduced Q1 revenues in later quarters as our experience is that it is difficult to regain all slipped revenues.

CTXS: Our 2009 revenue and EPS estimates are reduced from $1725mn to $1722mn and from $1.75 to $1.73, respectively. Our 12-month price target is $30 and we reiterate our Overweight rating.

DBTK: Our 2009 revenue and EPS estimates go from $103.2mn to $100.2mn (up 4% y/y) and from $0.70 to $0.67. Our 12-month price target is $15 and we reiterate our Overweight rating.

QSFT: We are lowering our FY09 revenue estimates from $750.8mn to $748.4mn but maintaining our EPS at $1.06. Our 12-month price target is $18 and we reiterate our Overweight rating.

SYMC: We lowering our F4Q09 revenue estimate from $1551.6mn to $1524.9mn and maintaining our EPS of $0.36. We are lowering our FY’10 revenue and EPS estimates from $6540mn to $6492.2mn and from $1.52 to $1.51, respectively. Our 12-month price target is $19 and we reiterate our Market Weight rating.”

MRM