Wall Street Beat: Picture looks bleak for hardware, chips

Reports from AMD, iSuppli, Gartner and IDC show that PC sales are set to drop year over year for the first time in a decade

Reports of weakness in the hardware and components sectors rolled in this week from market researchers and vendors, contributing to an overall decline in confidence in tech on the part of IT analysts and investors.

Though tech stocks on the Nasdaq are up about 16 percent for the year, they were up about 25 percent for the year about a month ago.

Worldwide shipments of PCs are likely to decline in 2012 for the first time in 11 years, according to a report this week from the IHS iSuppli Compute Platforms Service. PC shipments this year are forecast to decline by 1.2 percent to 348.7 million units, down from 352.8 million in 2011, iSuppli said. The PC industry has not seen a drop of this magnitude since the aftermath of the dot-com bust.

"There was great hope through the first half that 2012 would prove to be a rebound year for the PC market," said Craig Stice, senior principal analyst for computer systems at IHS, in a statement. "Now three quarters through the year, the usual boost from the back-to-school season appears to be a bust, and both AMD and Intel's third-quarter outlooks appear to be flat to down. Optimism has vanished and turned to doubt, and the industry is now training its sights on 2013 to deliver the hoped-for rebound."

There are signs that a rebound could occur next year, iSuppli noted. Ultrabooks and other thin notebook computers "remain viable products with the potential to redraw the PC landscape, and the addition of Windows 8 to the mix could prove potent and irresistible to consumers," iSuppli said.

Meanwhile, IDC and Gartner both reported this week that PC shipments declined in the third quarter. Global PC shipments dropped 8.3 percent year over year, with a total of 87.5 million units shipped in the third quarter of 2012, Gartner said. IDC put the decline at 8.6 percent.

Hewlett-Packard and Lenovo are slugging it out for the top spot in the flagging market. Gartner said that Lenovo slipped past HP to claim the number-one spot in the PC arena with 15.7 percent of the global PC market compared to 15.5 percent for HP. For its part, IDC reported that HP hung on to the top position with 15.9 percent of the market compared to Lenovo's 15.7 percent.

Last week at its annual financial analyst day Wednesday, HP CEO Meg Whitman said the company has a tough game of catch-up to play in hardware over the next few years. HP forecast earnings per share of US$3.40 to $3.60 for this fiscal year, below the prior estimate of $4.18 from analysts polled by Thomson Reuters. Whitman said the company needs to come up with a hit next-generation smartphone or other mobile device in order to maintain a leadership position over the next few years.

Meanwhile, even the mighty Apple has been hit by the decline in PC sales, both IDC and Gartner said. IDC said Apple sold 2.06 million Macs in the quarter, a drop of 7 percent year over year. Gartner said the decline was 6.1 percent.

The PC slump is affecting chip makers as well.

In a preliminary financial report, Advanced Micro Devices on Thursday slashed its sales forecast for the third quarter, blaming a tough economy for the decline. Intel's main rival now forecasts revenue for the quarter to drop by about 10 percent from the second quarter, compared to prior estimates that the decline would be no worse than 4 percent.

Though the U.S. economy appears to be slowly recovering from the Great Recession, IT hiring has leveled off recently. Last week's jobs report from the U.S. Bureau of Labor Statistics showed that the overall unemployment rate for September was 7.8 percent -- the lowest point since U.S. President Barack Obama took office. But things were not looking up for IT. In September, the IT industry lost 1,700 jobs, according to the report.

Next week some of the biggest names in IT will be reporting earnings. IBM, Microsoft, Google, AMD, Intel and Nokia are all due to report, and IT market watchers will get a broader picture of how the tech market is doing.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
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

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?