Volcanic ash disrupts IT biz

It's not only the global recession and economic slowdown that impacts the
global IT industry. Very often, there are issues like swine flu, bird flu or
even travel advisories issued by different governments that put a spoke on the
wheels of the IT sector. The latest brake to the momentum of the IT industry has
been applied by Eyjafjallajoekull (it's a real tongue twister pronounced as
ay-yah-fyah-plah-yer-kuh-duhl), the Icelandic volcano whose ash eruptions have
caused havoc to airline schedules around the world.

Most mobile phones are shipped on airplanes. This has made deliveries
vulnerable because of the ash cloud that has spread from Eyjafjallajökull. The
impact on mobile phone distribution has varied among vendors. Phone
manufacturers have re-routed their shipments to countries where the airports
remained open, and then sent the phones via trucks to their destinations. This
switching to trucks has resulted in a three day delay; but in most cases, this
has been handled with the current inventories maintained by vendors.

There was a small build-up of inventory during the end of Q1 in Europe that
has helped the phone manufacturers during the transportation mayhem caused by
the volcano. However, most phones come to Europe from Asia; therefore, it
becomes all the more crucial to check the impact on this trail. Taiwanese
smartphone maker, HTC, which ships its devices by air, claims that the air
transportation trouble in Europe has not affected its shipments so far.

Japan's Fujitsu's notebook PC shipments to Europe have been halted
temporarily due to the disruptions. Though, the company claims that there was
enough inventory in the region. Sony, Sharp, Hitachi and Panasonic, however,
claim that they were experiencing no impact. In Seoul, a Samsung official claims
that if the stoppage of flight services in Europe lasts more than a couple of
weeks, it will be negative for technology exporters.

A survey by the NBTA Foundation, the research arm of the National Business
Travel Association (NBTA), on corporate travel managers at major corporations
across the globe found that the volcanic ash over Iceland and much of Europe
negatively impacted travel for 80 percent of the companies, at an average cost
of nearly $200,000 per affected company and highlighted the importance of
effectively managing corporate travel.

The 234 survey respondents indicated that on an average, more than 160
travelers from each company were stranded away from their homes, costing the
company more than $197,000 in unexpected travel expenses. Roughly 2,000
companies were represented in the survey. The data indicates that more than
3,10,000 travelers experienced travel disruptions, costing the surveyed
companies more than $367 mn collectively.

While the closure hasn't yet impacted shipments of major chip makers,
including Samsung, Elpida Memory and Hynix Semiconductor; analysts say if the
disruption is prolonged, it could potentially hurt their earnings. Samsung may
see a bigger impact on its business than its peers because its exposure to the
European market is large.

Rajneesh De

Source: DQ