Dell, Hewlett poised for PC rebound
Analysts say Dell and Hewlett-Packard should benefit as companies upgrade their computer systems.
By James Rogers, TheStreet
Based on recent figures from research firm NPD, Piper Jaffray analyst Gene Munster predicted Apple's Mac sales would rise in the coming months.
"We expect the strong year-over-year growth in NPD data that we saw in January to have continued in the month of February," he wrote in a note on Monday. "We believe this represents a buying opportunity ahead of NPD data for the month of February on March 15."
In his note to investors, Munster maintained his “overweight” rating on Apple and its price target of $284. Apple shares hit a record high of $220.09 earlier today. Apple shares rose last week on news that the iPad will make its US debut on April 3. A resurgent PC business could further boost the company's share price.
Apple has already been enjoying strong Mac sales, increasing the pressure on its rivals. Apple's Mac shipments climbed 33% during the first quarter, reaching 3.36 million units. This surpassed the previous quarter's then-record shipments of 3 million. During its first-quarter conference call, Apple said it ships twice as many Macs as the average PC maker.
Munster says Mac sales were weak during the first half of 2009, making its 2010 numbers appear particularly strong. Still, the analyst expects the company to ship between 2.6 million and 2.8 million Macs in its seasonally weaker March quarter, compared to Wall Street's estimate of 2.6 million.
Piper Jaffray is not the only firm forecasting a major PC rebound. Goldman Sachs (GS) released its latest IT spending survey on Monday, which revealed that 40% of firms are planning to refresh their PCs this year.
"A significant PC upgrade cycle is likely to start in 2010," wrote Goldman Sachs analyst David Bailey in a note. "Our latest survey shows further momentum for corporate PCs, with H-P and Dell both gaining meaningful share of customer budgets."
Bailey expects a "strong rebound" in corporate demand as the economy recovers.
He said H-P's PC shipments rose 26% in the quarter ended in January from a year earlier, with revenue up 20%, driven largely by consumer sales. Dell, however, has been struggling with soft enterprise demand, though this might change.
"Dell's recovery should begin to accelerate in the next few quarters as the company begins to benefit from a ramping corporate PC replacement cycle," he wrote.
Tech research firm IDC recently reported that shipments of PC microprocessors grew more than 31% in the fourth quarter from a year earlier, providing yet more evidence of an improving economy.
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Why are stronger numbers considered bad news? Investors are worried about the impact on inflation and interest rates.
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