IBM may benefit but - read on ,
biz.yahoo.com
Several companies had already seen demand weaken and earnings wilt because of currency devaluations in Thailand, Malaysia and
other economies prior to the Hong Kong tumult.
One such company, sewing machine maker Singer Co. NV (SEW) on Thursday said currency played a major role in its earnings plunge
of 96 percent in the third quarter. A year ago, Asian markets produced 62 percent of Singer's profits.
Likewise, U.S. airlines with significant Pacific Rim business, including UAL Corp.'s (UAL) United Airlines and Northwest Airlines Corp.
(NWAC), are expected to suffer from lackluster performances in Asia.
But Hong Kong, a key financial center, forced the problem into the spotlight, particularly for financial companies.
Gerard Klauer Mattison analyst George Salem cited Citicorp (CCI) as a company with facing considerable risk.
''Of U.S. banking companies, Citicorp has by far the greatest exposure to Asia,'' said Salem, adding Citicorp derives about 20-25
percent of its total net income and balance sheet size from the Asia Pacific region.
Salem said no other bank draws more than 15 percent of its net income from Asia, listing J.P. Morgan & Co. Inc. ( (JPM)) at 15
percent, BankAmerica Corp. ( (BAC)) at 8 percent and Chase Manhattan Corp. (CMB) at 7 percent.
But those figures failed to tell the whole story, Citicorp spokesman Jack Morris said. He said the bank's Asia business was ''highly
textured'' with consumer and institutional features, some of which benefit from currency volatility.
He also said the company had anticipated the crisis by limiting some credit exposure and shifting some managers who had worked
through a similar situation in Latin America to key posts in Asian offices.
Perhaps even more than finance, the industry whose fortunes are most closely tied to the region is technology.
Makers of capital equipment used to produce semiconductors have seen stock prices plummet in recent sessions because of worries
about reduced demand from Asian customers.
Those concerns led UBS Securities analyst Mark FitzGerald on Friday to downgrade the entire group of semiconductor equipment
makers. He called Asian crisis a serious problem for the whole industry, which includes names like Applied Materials Inc. (AMAT) and
Novellus Systems Inc. (NVLS).
''We believe fallout from the Asian currency crisis will lead to steep cuts in capital spending programs at many of the leading Japanese,
Korean and Taiwanese firms,'' FitzGerald said.
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