As Asia's economic crisis claimed its first casualty, with software giant Oracle blaming it for disappointing second quarter earnings, sales are set to continue on the downward slope.
Oracle suffered a second quarter loss of $187 million (see analysis), which it blamed on a strong dollar and sagging growth in Asia.
"While several factors impacted the quarterly licence growth, the economic situation in the Asia-Pacific clearly had a significant impact," explained Jeffrey Henley, chief financial officer.
The US dollar's soaring value against Asian currencies played a large part in Oracle's slump. Analysts estimate that unfavourable exchange rates lopped 14 per cent off sales in the Asian region. Oracle said that it had expected sales in Asia to rise by 15 per cent.
Oracle's slide came at a time when computer sales throughout Asia are in a nosedive. The latest market forecasts released by IDC in Hong Kong predict that economic turmoil in Asia could cost the PC industry as much as $1.5 billion in sales this quarter alone.
A cocktail of higher import prices, inflation and unemployment are starting to bite into the profits and wallets of millions of Asians, who have watched the region's economic 'miracle' evaporate in a matter of months. New computers, warn analysts here, are likely to be one item many companies and individuals will try and forgo.
The latest forecasts will come as a disappointment to US computer makers who see Asia as a high growth frontier market. Only Taiwan, says the IDC, will likely escape the slump, remaining basically stable.
Taiwan's export industry will benefit from the weakening of the local currency. Taiwan Semiconductor Manufacturing, Taiwan's largest chipmaker, said sales had leapt by 86 per cent in November compared to the previous year.
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