Technology and information providers, already grappling with penny-pinching customers, were dealt another blow this week with the bankruptcy of Lehman Brothers and the takeover of Merrill Lynch.
Losing two venerable Wall Street firms and big spenders for cutting-edge technology is troubling for the tech industry's biggest players, which have been coping with companies scaling back budgets for software and hardware upgrades this year.
Research firm Financial Insights, owned by IDC, said information technology budgets for hardware, software and tech services shrank by 6 percent due to Lehman's collapse and Merrill's sale to Bank of America.
"The number of potential customers continues to shrink, while institutions themselves become more complex," Financial Insights wrote in a report.
The technology staples of Wall Street--Cisco for networks, EMC, for data storage, IBM for services, Microsoft for software--are all likely to face some loss of business.
"Companies started cutting back information technology budgets a while ago so they are already pretty thin," said Forrester Research analyst Ellen Carney, who looks at the financial services market. "The writing has been on the wall."