Oct 26

The PC market's new reality and its impact on tech stocks

By MultiplyWealth's Team

The surprising tailspin in personal computer sales this year raises an array of questions for tech investors going forward. Shipments of PCs, including laptops and netbooks, fell more than 8% in the third quarter, the sharpest decline since 2001, according to reports by IDC and Gartner.

First off, is the decline a short-term blip representing deferred purchases ahead of the late October launch of Windows 8 or a tipping point in which PCs start to fade permanently from the scene in this new era of mobile computing led by tablets and smartphones?

Intel CEO Paul Otellini, in lowering sales guidance for the chip leader, said on Oct. 16 that he expects PC sales in Q4 to grow at half the seasonal norm. (Intel faces other challenges beyond PC sales, as Christopher Mims outlines.) The comments helped push down the stocks of both Intel and IBM (IBM), which still has exposure to the PC market.  IDC in latest outlook for the PC industry isn’t quite as bearish: “With the launch of Windows 8 in 4Q12, we expect shipment growth to return to mid-single digits in the fourth quarter and into next year.”

If the long-term secular decline of the PC market is truly underway, which companies most stand to benefit? Low cost Asian PC makers may have an edge, at least at the moment. Gartner recently crowned Lenovo (LNVGY) as the new king in PC manufacturing after it eclipsed Hewlett Packard (HPQ) in the third quarter. (IDC has HP still holding a slight market share edge.)

Preliminary Worldwide PC Vendor Unit Shipment Estimates for 3Q12 (Units)

Company

3Q12 Shipments

3Q12 Market Share (%)

3Q11 Shipments

3Q11 Market Share (%)

3Q12-3Q11 Growth (%)

Lenovo

13,767,976

15.7

12,536,756

13.1

9.8

HP

13,550,761

15.5

16,217,987

17.0

-16.4

Dell

9,216,638

10.5

10,676,513

11.2

-13.7

Acer Group

8,633,267

9.9

9,616,572

10.1

-10.2

ASUS

6,380,690

7.3

5,708,807

6.0

11.8

Others

35,954,748

41.1

40,683,666

42.6

-11.6

Total

87,504,080

100.0

95,440,301

100.0

-8.3

 

If you want to talk about how potential market events or the fiscal cliff might affect your equity portfolio, and perhaps talk about whether some of our defensive-minded investment strategies might be right for you, write Multiplywealth at notice@multiplywealth.org It’s your own account; you can see the balance change on a daily basis, make investment changes extremely quickly, and add to or pull your money at your complete discretion.

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