NEW YORK (CNN/Money) – Approximately 125,000 people will be heading to the annual Comdex tech trade show in Las Vegas next week.

Attendees will probably eat up all the new gadgets and do their best to put on a happy face when asked about tech's prospects for the next year. In fact, a section of Comdex's website proudly proclaims: "COMDEX 2002... Where 2003 begins. COMDEX has always set the pace for the IT industry and this year it's the place to begin the recovery."

Delusional? A little bit. The painful truth is that a tech recovery might not happen in 2003. And even if there is one, it might be muted at best. Even Comdex's organizer, Key3Media Group is reeling. On Thursday, the company disclosed in its latest earnings report that it is considering filing for Chapter 11 bankruptcy. The stock, which started off this year at $5.33, now trades for just 1 CENT.

Michael Millikin, senior vice president of Comdex Worldwide, says that regardless of what happens to Key3Media, Comdex will go on. He notes that the Comdex brand has been sold several times during its more than 20 year history so even if Key3Media were to seek bankruptcy protection, another company would probably take over Comdex.

Nonetheless, Millikin concedes that Comdex is shrinking. The event is now pretty much confined to the Las Vegas Convention Center. In prior years, Comdex was so big that it needed two other venues in addition to the Convention Center for exhibition space. Millikin says that 1100 companies bought space this year, down from 1685 last year and 2337 in 2000. Apple Computer and Gateway are not attending and Millikin says IBM will have just a small presence.

And this year's expected attendance of 125,000, the same as last year, is well below the average attendance of 150,000 and peak of 211,000 in 2000.

To be sure, Comdex still attracts many of the largest tech companies and their executives. Microsoft's Bill Gates, Hewlett-Packard's Carly Fiorina and Sun Microsystems' Scott McNealy are three of the most prominent keynote speakers. Dell Computer will be debuting its new handheld device at Comdex.

And there appear to be some small signs that the outlook is improving for a select group of technology companies. Mark Schultz, portfolio manager with M&T Asset Management, says that spending has been slightly better than anticipated for hardware companies like Cisco Systems, Network Appliance and IBM.

"People's pessimism is a little excessive," says Schultz. "Even in tough times companies have to keep the ball rolling. It may be at a reduced rate but there is demand out there."

Even though there may be some demand for tech, there is little reason for corporations to undergo a massive wave of tech spending anytime soon, despite the fact that it has been three years since the last major buying binge.

Many companies splurged at the end of 1999 in order to prepare for potential Y2K problems and typically, companies try and replace big ticket tech items every three years so that they don't wind up with obsolescent equipment. But faced with an uncertain economy, it appears that companies are willing to hold off on big upgrades unless it's absolutely necessary.

"Let's be honest. The equipment doesn't break after three years," says Alex Vallecillo, a portfolio manager with National City Investment Management. Vallecillo adds that many companies still have hardware and software sitting on the shelves yet to be implemented.

To that end, Baby Bell Verizon helped spark a big rally in telecom equipment stocks earlier this month when it announced that it was unveiling a new enterprise network. But the rally was short-lived because Verizon disclosed in a conference call that it would not need to spend on new equipment to build out the network.

There certainly will be plenty of cool items debuting at Comdex but many will be geared to the consumer. There doesn't appear to be a product out there getting buzz as a "must have" for corporate IT managers.

"There's no 'killer app' that tells businesses they have to spend. And companies are still being careful," says Michael Mahoney, managing director with EGM Capital, a hedge fund that focuses on tech, telecom and media companies.