As Corporations' Profits Dwindled Through 2001, IT Budgets Also Shrank Worst Year For IT Since 1975 There are signs that 2002 may be a little better for tech firms -- but not much.(INTERNET & TECHNOLOGY)

Byline: ANTONIO A. PRADO

Spending on information technology, or IT, plunged in 2001 like never before as the economy slid into recession. Nearly half a million tech jobs were slashed in the process.

The Commerce Department said year-to-date IT spending as of Oct. 1 fell 8.3% from the year-earlier period. In contrast, IT spending for the first nine months of 2000 rose 20.6% from the same period in 1999.

Spending in the first three quarters of 2001 was nearly $15 billion less than the same period of 2000, Commerce says. In white-hot 2000, IT spending from January to September rose $307.3 billion from the same period of 1999.

2001 was the worst year since 1975, the spending contraction on record since Commerce started keeping track in 1967. In 1975, IT spending fell just under 1% vs. 1974.But there are signs, albeit faint, that the worst may soon be over. 2002 might well be better for the tech economy, at least a little.

First, though, corporate earnings must rebound. To stave off losses or curb plunging profits, companies in 2001 had to slash spending on tech and other goods.

That led to a surge of excess tech inventory. And that forced tech companies to cut output and lay off workers.