No area of technology will be immune to the decline. Hardest hit: the computer hardware sector, which is expected to see spending fall 15 percent to $324.3 billion. Seems even the promise of government stimulus packages won’t be enough to offset this ugly near-term outlook. Said Gordon, “Economic conditions have continued to erode business confidence in all regions. There is a continued general sense of uncertainty in the market and a lack of clarity of actual amount of toxic debt out there. IT organizations will look for ways to shift spending from capital expenditures to operational efficiencies.”

Though Wii manufacturer Nintendo posted a 21 percent gain in quarterly operating profit on brisk demand for the videogame console, it slashed its forecast for full-year sales of the device (it slashed its full-year profit forecasts as well–by 33 percent). Nintendo had expected to sell 27.5 million units during its fiscal year, which runs from April until March. Now it expects to sell only 26.5 million. “Wii sales in Japan during the year-end shopping season didn’t meet our forecast,” Nintendo President and CEO Satoru Iwata said during an earnings briefing. “Still, I don’t think demand for the Wii has run out.”

No, of course not. But clearly the Wii isn’t as recession-proof as was once thought. And, despite its appeal to budget-conscious consumers, Nintendo doesn’t feel it’s immune to the general slowdown in consumer spending. Said KBC Financial Products analyst Hiroshi Kamide: “Today’s revision suggests that the roaring pace of Wii growth that we’ve seen until now may be over.”

“We believe demand has deteriorated across most of the company’s core end-markets, with a particularly sharp slowdown in handsets, evidenced by a number of key supplier and competitor pre-announcements,” Sheerin wrote in a note to clients. “[The economic downturn] will make a recovery in the core handset business even more challenging and could accelerate cash burn.”

More ugly news for Motorola (MOT), which last week had its credit rating slashed to Junk by Standard & Poor’s.

Hell of an understatement, given the news. Hope they serve alcohol at that Capital Markets Day event….

And, of course, it will sooner or later. Certainly, the Semiconductor Industry Association, which provided the sales numbers above, thinks so. Earlier this week, it called on the U.S. House of Representatives to pass the $700 billion financial rescue package before it. “Consumer demand accounts for more than two-thirds of the U.S. economy,” said SIA president George Scalise. “A slowdown in sales of a broad range of consumer products such as personal computers, cellphones, and entertainment electronics would have an adverse impact on semiconductor sales in the fourth quarter, which is normally the strongest quarter for the chip industry. The entire supply chain, including our suppliers and customers, will be harmed if access to credit becomes difficult.”

“When Dell announced Q2 financial results on Aug. 28, 2008, it reported continued conservatism in IT spending in the U.S., which had extended into Western Europe and several countries in Asia,” the company said in a statement. “The company is seeing further softening in global end-user demand in the current quarter.”

Translation: If you thought Q2 was lousy, wait until you see our Q3.

Coming as it does after a second quarter in which Dell (DELL) reported a 17 percent drop in earnings and announced plans to sell off its factories, the warning doesn’t bode at all well for the company’s next round of financials. Said Bill Kreher, a securities analyst with Edward Jones, “The company’s inconsistent performance and lack of confidence means there’s a lot of uncertainty in the turnaround.”