Tech sector revenue to crash 1.2% in Q2

Net earnings are likely to plunge 26% YoY amid demand decline.

DBS Group Research said that in view of the rapid deceleration in demand momentum, Q2 tech revenue is expected to fall 1.2% y-o-y and to grow a modest 2% q-o-q from the low base in 1Q12.

Here's more from DBS:

Net earnings excluding Broadway is likely to have plunged 26% y-o-y and risen 3% q-o-q, compred to our earlier projection for a 5-10% sequential rebound. This is as margins remain under pressure due to higher manpower costs in China and negative operating leverage.

We had expected a sequential rebound in Q2 profits earlier, underpinned by continuous flood recovery for HDD coupled with a gradual ramp up of new products for a seasonally stronger Q3.

However, our channel checks showed that demand has slowed quite rapidly over the last month, from order cutbacks to delivery delays and lacklustre new launches. As it turns out, Q2 has not improved and is even likely to fall short of expectations.

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