Wall Street Beat: Markets advance but tech trends stay stable

Intel, with the weakest share gains of the Dow tech stocks, scrambles in the mobile device market

While U.S. markets have surged lately, with the Dow Jones Industrial Average hitting milestone after milestone in 10 straight days of advances, a relatively modest increase in the value of IT company shares reflects the reality that a rising tide will not lift all boats in the tech sector.

Though markets got off to a slow start Friday with major exchanges taking a dip in morning trading, the Dow hit another nominal (not adjusted for inflation) record Thursday, rising 83.86 points to close at 14,539.14. So far this year, there has been an increase in the share price for all five of the Dow's tech stocks: Hewlett-Packard, Intel, IBM, Microsoft and Cisco. IBM shares hit US$215.80 Thursday, a 52-week high.

But on the whole, the rise in the value of IT shares has been more moderate than that seen in other sectors. The Nasdaq Computer Index has increased 2.97 percent this year as of Thursday's close and was down 0.34 percent in midday trading Friday. That compares with a 7.93 percent rise in the Nasdaq as a whole and a 10.95 percent rise for the Dow industrials. The Nasdaq Computer index has been the weakest sector in the Nasdaq so far this year, beaten by, for example, banks, industrials and insurance stocks.

There is general confidence that tech company sales on the whole this year will rise as IT spending increases globally. Even taking the U.S. spending "sequestration" -- an across-the-board cut in government spending that is expected by most economists to slow economic growth -- Forrester forecasts that U.S. tech spending will increase in the 6 percent to 6.5 percent range this year.

Global software spending, at $542 billion, will fuel growth for IT this year, according to Forrester. Spending on computer equipment, however, drags down overall growth, increasing only 2.1 percent to $416 billion this year, Forrester said.

Part of the reason is the state of maturity of PCs. There is simply not that much of an increase in capabilities from model to model anymore -- at least not in the way there was years ago.

"For a generation, PCs have steadily improved their hardware performance and capabilities every year, with faster microprocessors, rising storage capacities and major increases in DRAM content," said Clifford Leimbach, memory analyst at information and analytics provider IHS, in a report this week.

"These improvements -- largely driven by rising performance demands of new operating system software -- have justified the replacement cycle for PCs," Leibach said. "However, on the DRAM front, the velocity of the increase has slackened. This slowdown reflects the maturity of the PC platform as well as a change in the nature of notebook computers as OEMs adjust to the rise of alternative systems -- namely smartphones and media tablets."

Annual growth in the average DRAM usage per shipped PC has been slowing dramatically since peaking in 2007, according to the IHS iSuppli DRAM Dynamics Market Brief. Following a 21.4 percent increase in 2012, the average growth of DRAM content per PC will decline to a record low of 17.4 percent this year. This compares to the high point of 56.1 percent in 2007, and 49.9 percent in 2008, according to the report.

Meanwhile, global PC shipments are forecast to drop year-over-year by 1.3 percent in 2013, according to IDC.

Of the tech bellwethers in the Dow, it's no surprise that Intel, the company arguably most exposed to the hardware and PC markets, is faring the worst. As of midday Friday, Intel shares were trading at $21.65, up only $0.50 since the beginning of the year.

The tablet market is one of the few bright spots for hardware this year. A jump in sales of smaller, lower-priced devices in the tablet market led IDC this week to increase its 2013 forecast for the worldwide tablet market to 190.9 million, up from its previous forecast of 172.4 million units.

"Vendors are moving quickly to compete in this space as consumers realize that these small devices are often more ideal than larger tablets for their daily consumption habits," said Jitesh Ubrani, an IDC analyst, in the IDC report.

No wonder Intel is trying to take on ARM in the market for the faster-growing segments of the mobile device market, with products like its single-core Intel Atom Z2420 processor code-named Lexington, targeted at low-cost smartphones and tablets.

Join the Good Gear Guide newsletter!

Error: Please check your email address.

Tags business issuesIBMMicrosofthardware systemsciscoComponentstabletsfinancial resultsprocessorsintelHewlett-Packard

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Marc Ferranti

IDG News Service
Show Comments

Cool Tech

Crucial Ballistix Elite 32GB Kit (4 x 8GB) DDR4-3000 UDIMM

Learn more >

Gadgets & Things

Lexar® Professional 1000x microSDHC™/microSDXC™ UHS-II cards

Learn more >

Family Friendly

Lexar® JumpDrive® S57 USB 3.0 flash drive 

Learn more >

Stocking Stuffer

Plox Star Wars Death Star Levitating Bluetooth Speaker

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest News Articles


GGG Evaluation Team

Kathy Cassidy


First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni


For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell


The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi


The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott


My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?