How Bad Is the PC Market? Analysts Count the Ways.
Shares of companies involved in various parts of the PC industry did about as well as you might expect today, in the wake of two reports yesterday showing that the first quarter of the year produced the largest market contraction since records have been kept — that is to say, they didn’t do well at all.
Here’s a quick rundown: Hewlett-Packard fell more than 6 percent to $20.88. Dell fell more than 1 percent to $14.04. Apple fell slightly to $434.33. Intel fell 2 percent to $21.83. Advanced Micro Devices fell 3.5 percent to $2.52. Microsoft fell almost 4.5 percent to $28.93. Hard drive manufacturer Seagate fell 3 percent to $36.53. Western Digital fell 2.5 percent to $17.53. All told, they fell by an average of about 2.85 percent.
It was that kind of day, and the financial analysts who track the stocks of the PC makers had to jump in with their own assessments.
“We ultimately don’t believe that tablets are ‘replacing’ PCs (very few people we have met have actually retired their PC because of a tablet),” analyst Toni Sacconaghi of Bernstein wrote in a note to clients today, “but they are contributing to PCs being used less — which, in turn, is pushing out the replacement cycle for PCs. This is a big deal.”
He also said that HP in particular, which according to IDC’s reckoning saw a decline in PC sales of more than 23 percent year on year in the first quarter, may miss sales estimates by more than $700 million as a result. “A key question is whether the contraction in volume (potentially $1 billion in revenue) will have a material impact on PC margins,” he wrote. “We suspect that some of HP’s share loss was the result of increased pricing discipline and a focus on margins in the quarter.”
Shaw Wu, analyst with Sterne Agee, placed at least some of the blame for the market’s poor performance at Microsoft’s door. “We frankly believe Microsoft’s strategy of forcing user interface changes that nobody wants has proven to be a disaster,” he wrote in a note issued today. “Not to mention the customer confusion with too many choices with multiple form factors.” He now expects the PC market to contract in 2013 by 5 percent, down further from his earlier 2 percent guidance.