PC sector loses steam to economy, tablets

Two prominent research firms recently lowered their forecasts for PC growth this year.

By Kim Peterson Jun 8, 2011 4:10PM
The personal computer industry is still growing, but not as quickly as people had thought.

The research firm Gartner just lowered its forecast for the industry to 9.3% global growth, down from its prior projection of 10.5%, Dow Jones reports. Another research firm, IDC, also dropped its growth forecast this week to 4.2% growth from 7.1%.

There are two main reasons for the cuts. In this economy, consumers aren't about to blow a hole in their budgets with a new computer purchase. And those who do want to spend money will be looking more closely at cheaper tablets like the iPad.

But there is a bright spot. Businesses are continuing to replace their old computers, the ones still running Windows XP.

So are there any bright stocks in the industry? Jim Cramer still thinks Dell (DELL) is hot. He explains this reasoning in this video. Post continues after video.
The slowing growth affects several categories of companies, from computer makers like Hewlett-Packard (HPQ)to chipmakers like Intel (INTC) to software makers like Microsoft (MSFT). Note: Microsoft owns MSN Money. Dell shares fell more than 1% today to close at $15.68, Intel shares fell nearly 1% to close at $21.90 and Microsoft shares dropped a half of a percentage point to close at $23.94.

Intel, for its part, is much more bullish on the industry. It thinks PC shipments will grow 11% this year. Too optimistic? The problem is how to count the buying activity in emerging economies, Dow Jones reports.

1Comment
Jun 8, 2011 6:44PM
avatar
Smile Nice try but both Intel and Microsoft are in sweet spots, dividends and value, that will get sweeter if they go down, %yield goes up, or go up you get P/S appreciation.  The whole PC's dead crowd may just wake up in 6-9 months to the fact that the PC's mobile.  Intel is approaching a revolutionary product cycle, 3D plus 32nm, 22nm and 14nm, and Microsoft will be beta testing Windows 8 in the fall for release in 2012. Windows 8 will run on ARMH and Intel so there's no more touch based debate between PCs, smart phones and tablets. It adapts to the devices peripherals so keyboard, mouse and touch screen are all accommodated and it includes W7 interface for legacy apps. Time to keep averaging in until this correction plays out over next 2-3 months and economy starts to grow again..
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