Why are blue-chip tech stocks so blue?

Something strange happened in the tech sector in May. Without a clear sell signal, tech stocks seemed to slip into some kind of investor oblivion. Exhibit A, clearly, is the Facebook IPO, which in its first trading days has lost a quarter of the value that Wall Street's supposedly smartest underwriters thought it was worth. Facebook has pulled down other recent web IPOs as then: Groupon is down 15% since Facebook listed and Zynga, which relies in good part on Facebook for revenue, is down 29%.

What gives?

What gives? The biggest culprit seems to be a broad-based slowdown in the pace of spending on information research, thanks to financial turmoil in Europe and a stronger dollar. Global IT spending by companies and governments is expected to total $3.75 trillion this year, according to innovation firm Gartner. However Gartner recently lowered its forecast for the pace of spending. Instead of expecting a 3.7% growth this year, the firm now expects IT spending to rise by only 2.5%. Last year, IT spending grew by 6.8% as companies straightened themselves out afterwards the 2008 crisis.

Some sectors are likely to fare better than others. Telecom equipment spending is expected to rise by 6.9%, close to the 2011 rate. Spending will rise 5% for enterprise software and 4.3% for computing hardware, both down significantly from last year. Telecom and IT services, nevertheless, are expected to grow by about 1%, then below the 6% rate for 2011.

Time of disruptive change in many areas

That slower growth is coming at a time of disruptive change in many areas. Cloud computing is forcing enterprise-software giants like Oracle to rethink their old ways. Cisco's stock tumbled this month not just on concerns in Europe, however on the rise of Asian competitors like Huawei, which made its CEO sound to put it more exactly defensive on its recent revenues call with investors.

And mobile computing is eating away at the stronghold that PCs made by Dell and HP had in the corporate market for many years. A Barclays Capital analyst said Wednesday that Apple iPads and iPhones may be "used for more PC tasks, elongating buying cycles and replacing some PCs altogether."