[DKKBF] Datacraft Asia Falls on Concerns Over Cisco Systems (Update1)
Singapore, Feb. 8 (Bloomberg) -- Shares of Datacraft Asia Ltd. fell as much as 4.4 percent on concern lower-than-expected earnings at Cisco Systems Inc., it's largest supplier, may signal slowing demand in Asia.
Cisco Systems, the No. 1 maker of computer-networking equipment reported that profit for the fiscal second quarter ending January missed forecasts. It also said that revenue may fall as much as 5 percent from the last quarter for the three months ending April.
``We will have a sharp contraction in global demand for electronics and telecom-related equipment,'' said Lim Eng Hai, head of research at J.M. Sassoon & Co. ``We are going to see a period where stocks are going to struggle.''
Declining orders for computer-networking equipment in the U.S. and Europe have raised concern demand in Asia may also wane. That would hurt Datacraft, which has set up a quarter of Asia's data networking systems.
Shares of Datacraft, which has set up a quarter of Asia's data networks, fell 5 cents, or 0.9 percent in recent trading, to S$5.65. The company's shares have fallen about 16 percent so far this week.
Optimism
Still, some analysts say demand in Asia will remain strong and Cisco's report has made Datacraft shares cheap relative to its earnings. Datacraft reported last month its fiscal first-half profit jumped 71 percent.
Some of the countries in the region, such as Taiwan and Singapore, are relaxing telecommunications regulations and allowing more players to enter the market, sparking demand for new equipment and services provided by Datacraft.
``The U.S. is in the maturity stage and Asia is still booming,'' said Brenda Lee, an investment analyst at Daiwa Institute of Research (Singapore) Pte.
Last week, Datacraft said it won new contracts in Indonesia and China. It also recently announced a new $10 million contract to build a new data network in Taiwan.
Datacraft is a unit of Dimension Data Holdings Lt., South Africa's biggest information technology company.
-Natalia Olynec in the Singapore newsroom (65) 212-1116 with reporting by Haslinda Amin and Chan Sue Ling/msh
Story illustration: To graph Datacraft's stock price performance against the benchmark index, see {DAT SP COMP }
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-0- (BN ) Feb/08/2001 3:45 GMT
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