Big Blue Slowed By Asian ‘Flu’ Ibm Blames Crisis In Asia, Strong Dollar For Lackluster Earnings

Clouds from Asia hovering overhead are starting to darken the outlook for U.S. corporations well into 1998. But some analysts say the financial warnings may be too shrill.

International Business Machines Corp.’s stock plunged nearly 8 percent on Wednesday after the No. 1 computer maker reported lackluster fourth-quarter results and warned its profits would fall short in the first quarter - dragged down in part by slack consumer demand in Asia and the strengthening dollar.

Microsoft Corp., the biggest independent maker of software, on Wednesday reported higher quarterly profits despite an 8 percent drop in Southeast Asia and Far East revenues. But, Microsoft chief financial officer Greg Maffei added, “Economic weakness in these geographies clouds the outlook for calendar 1998.”

The high-tech titans are far from the only bearers of future warnings. But some analysts say that the media renzy over Asia’s woes and corporate eagerness to obscure other business weakness may be potentially exaggerating the region’s impact - at least in some instances.

“You see some companies blaming stuff on Asia, which is nonsense,” said Michael Murphy, an independent industry analyst based in San Francisco.

IBM said there was a slowdown in Japan for its laptop and PC sales. But Murphy said a disappointment not as frequently mentioned was softening demand for IBM’s mainframes, the powerful business computers that are the company’s most profitable product.

Despite weaker consumer demand in Asia, U.S. makers of high-tech equipment are holding up relatively well in part because Southeast Asia comprises a relatively small chunk of global sales. For example, No. 1 PC maker Compaq Corp. on Wednesday reported a 37 percent increase in global quarterly sales.

For its part, IBM said the damage from Asia wasn’t expected to last through the rest of this year as global financial aid to the region starts to help lift its economy.