The pulse of technology spending remains weak. That's the take-away from the latest results out of Tech Data (NASDAQ:TECD), the No. 2 distributor of computer products to corporations behind Ingram Micro (NYSE:IM).

Tech Data's second-quarter results showed modest top-line improvement, albeit without any positive follow-through on the earnings line. Sales of $4.2 billion were 4.6% higher than the year-ago quarter and ahead of analysts' consensus of $4 billion. Earnings, before special charges, came in at $0.34, down 43.3% from last year's Q2 and below the analyst forecast of $0.36.

Even the positive sales growth deserves an asterisk, however, as it was the result of currency gains in Europe. Sales in Europe (52% of total sales) were higher by 24.1% on a reported basis, but up only 2.8% on a local-currency basis. In addition, sales in the Americas region (48% of total sales) were down 10.8%. In other words, had it not been for currency gains in Europe, Tech Data's sales would've declined by about 3.7%.

Drilling down, Tech Data's operating margin was whittled to a measly 0.7% from 1.4% a year ago. Management cited competitive pricing as a factor behind the margin squeeze. In addition, the company was forced to increase the scope of its workforce reduction plan beyond the 800 layoffs announced in June, resulting in additional charges.

The ugliness washed over onto the balance sheet, as well. Net debt (debt minus cash) was higher at $341 million vs. $192 million at this time one year ago. One additional yellow flag is that inventory increased 15.3% year-over-year, which is substantially faster than sales growth over the same period.

Is this the picture of an improving technology landscape? It seems not. Nevertheless, in a stretch for optimism, Tech Data's management noted "improving market conditions... in the Americas during the second half of the quarter." That, however, was tempered by its outlook on Europe, which they said, "may impede our short-term potential."

If any company has a read on technology spending, it's Tech Data. Its $4 billion in quarterly IT sales are not far behind Cisco's (NASDAQ:CSCO). But at face value, Tech Data's report hints of no real improvement in technology spending.

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