Forbes.com
PC Industry Blames Europe
By Arik Hesseldahl
Has the PC market caught a European flu? It certainly looks like it.
It's been two weeks since Intel's (Nasdaq: INTC - news) warning that slowing European sales prompted investors to chop more than $13 from its stock price. It's been one week since Apple Computer (Nasdaq: AAPL - news) cited Europe as part of the problem for its own slowing sales. Investors responded by erasing $27.75 from Apple's stock price.
Perhaps then, in the days since, investors have grown sufficiently numb to the PC industry's bad revenue news. Dell Computer (Nasdaq: DELL - news) admitted on Oct. 4 that European sales were slowing. On the news, Dell's stock, then already trading at $28.19--less than half its March 22 high of $58.13--lost another $3, or 10% of its value.
Dell's admission contradicted statements it made alongside Compaq Computer (NYSE: CPQ - news) and Hewlett-Packard (NYSE: HWP - news), which dismissed Intel's sales warning as Intel's problem alone, saying sales forecasts were on track.
But concern over the status of the European market continues to give tech investors fits of anguish. On Oct. 4, investors slapped aside good earnings news from PC memory chip maker Micron Technology (NYSE: MU - news), as it handily beat Wall Street with third-quarter earnings of $1.20 per share, and a $726 million profit on revenue of $2.57 billion. Micron's stock price dropped $5.94 to $41.
But some industry analysts have yet to join in singing the European blues.
Count Bruce Stephen, vice president of PC market research at Framingham, Mass.-based research firm International Data Corp., among them. Stephen says the third quarter is traditionally slow for European PC sales, while the fourth quarter often makes up for the difference.
``Europe tends to have the biggest spike of any region worldwide during the fourth quarter. They also have a strong holiday buying component,'' he says. ``Their market tends to go to sleep during the third quarter. A lot of business and consumer buying shuts down. People take time off.''
If Stephen is right, that means there may yet be some good news from PC makers like Dell and Compaq coming out of Europe before the year is out.
Overall, IDC remains bullish on worldwide PC sales for the third quarter. In September the firm forecast sales of 33.4 million PCs worldwide, an increase of 18.5% from the same quarter a year ago, and a 10% jump from the second quarter.
Despite the recent spate of dire warnings, the firm still expects European PC sales in the third quarter to finish 14.5% ahead of the same quarter last year, and 7.5% ahead of the second quarter.
In the second quarter, Dell came in second in the global market for PCs with an 11.4% share, trailing only Compaq's 13.2%. Hewlett-Packard and IBM (NYSE: IBM - news) came in next with about 7% each.
``We continue to hold to the notion that the market is quite multidimensional,'' Stephen says. ``And we still think the overall growth picture for PC sales looks healthy.''
Go to www.forbes.com to see all of our latest stories. |
