by Briony Hale BBC News Online business reporter

Hopes of a tech sector recovery are fading further into the distance.

As last year drew to a close, a host of companies claimed the battered and bruised tech sector would pick up towards the end of 2002.

But following this year's slew of first quarter results, analysts are convinced that it simply will not happen.

Companies are not going to invest in technology until the green shoots of recovery are apparent elsewhere

Steve Prentice Gartner

Many of the firms themselves are highlighting the seeds of recovery that they see.

Intel, for example, is ever hopeful that companies will be keen to upgrade their computers three years after the millennium.

And mobile phone makers continually emphasise the appeal of colour screens and data services as the catalyst for replacement sales.

But such statements - coupled with weak results and warnings of lowered revenue and profit expectations - have a definite air of clutching at straws.

"Inevitably, vendors will be talking up whatever signs of a recovery they see," Steve Prentice, vice president and director of research at Gartner, told BBC News Online.

"But it's not going to happen this year."

Trailing behind

Some of the vendors have been trying to persuade the world that technology is the way to lift the economic gloom.

We believe technology is a trailing rather than a leading indicator

Steve Prentice Gartner

But many analysts are convinced it is going to be the other way round.

"Companies are not going to invest in technology until the green shoots of recovery are apparent elsewhere," Mr Prentice said.

"We believe technology is a trailing rather than a leading indicator."

Confessions

The trading updates for the first three months of 2002 have been the first real indication of the tech sector's health so far this year.

The movers and shakers of the industry - Microsoft, SAP, IBM, Nokia, Nortel and co - have all lined up to make a progress report, some of them even managing to boost their bottom lines.

But almost all have confessed that the key indicator - how much money big companies are prepared to spend on IT - has been disappointing.

And without renewed investment from the big corporate spenders, a true tech sector revival can be ruled out.

Time Out

Companies are subconsciously taking a 'gap year' from IT spending, Gartner wrote in a recent research note.

It says the firms are suffering from "tech indigestion" where companies have failed to absorb the benefits of the investments made two or three years ago.

The naivety has not dropped out of this sector yet

Sean Maher Nomura

That means they are much less prepared to invest in upgrades, especially against a backdrop of wider economic gloom.

And it leaves the technology firms languishing in somewhat of a void.

Part of the problem is that there is no new technology to take the world by storm and lift the whole sector, says Nomura's Sean Maher.

Empty horizon

The 1980s was the era of the PC while the 1990s boasted mobile phones.

The horizon is looking pretty empty so far this decade, putting all the emphasis on upgrading existing products rather than investing in anything new.

People have comfort blankets, and every now and then the comfort blankets catch on fire

Sean Maher Nomura

Many tech firms have been trying to bridge the gap by concentrating on services.

Europe's largest software giant, SAP, managed to offset a continuing fall in license sales with consulting fees.

But analysts know that that's not a long term solution for the industry. "Clever, but rather sad," was one analyst's comment on such a strategy.

Telecom transition

Telecom firms are also stuck in a period of nothingness.

The mobile handset market is already saturated in most developed countries.

But the new generation of wireless technology - which allows mobile users to watch video clips on their handsets - has yet to take off.

"The industry remains in transition," Nokia said, warning of a drop in sales for the rest of the year. "The speed of this transition has been slower than we anticipated.''

Perhaps even more worrying is the growing concern that the new wireless technologies will not be as popular - or profitable - as once presumed.

And that leaves a huge question mark hanging over the telecoms industry as it waits for the new phase to kick in.

Chip hopes

The chip sector is the one bright spot amongst the wider gloom, and there are definite signs that things are picking up.

Initial estimates suggest that worldwide demand for chips grew by about 10-15% during the first three months of the year.

I'm out of the business of predicting

Larry Ellison Oracle

But analysts are still cynical, saying the industry is taking its lead from consumer electronics - new items like portable DVD players - which have stayed popular due to strong consumer spending.

And many think a chip recovery is unsustainable without corporate enthusiasm for personal computers.

"The naivety has not dropped out of this sector yet," Mr Maher said.

"People have comfort blankets, and every now and then the comfort blankets catch on fire," he said, sounding a warning note about the reality of a chip sector recovery.

Dangerous predictions

2000 was the year of high drama for the technology sector, and 2001 quickly became the horrific year to forget.

2002 is looking increasingly likely to be the year that the tech sector bounces along the bottom.

Meanwhile, the bulls are saying the fall was too steep and too fast, while the bears fear a double dip.

"I'm out of the business of predicting," Oracle's usually outspoken chief Larry Ellison said recently.

Presumably because technology sector predictions or revival have a nasty habit of not coming true.