Hi Yogi;
<<. What is your catalyst for recovery in the pc sector?>>
Sorry for the delayed response. I actually responded from my hotel in Singapore on Friday but for some reason I see that it never got posted so I must have missed a step in the process.
I think final acceptance of Windows 2000 will help. In general, however, I do not think we will see the growth rate in the twenties again except in certain sectors. Asia, for example, should enjoy 24 - 28 % unit growth rate for the next few years as long as we don't see a slip back into the R word. At this point I have convinced myself we won't but I could be just whistling past the graveyard.
Morgan Stanley etc.etc. had the clip below to say about PC's last Thursday.
Thanks for the Dubya/Bonzo pics. Many have speculated that he isn't going to get the honeymoon most new hires get and the effort someone put in to create that montage supports that theory. <G>
When we ponder the PC industry and the impact on drives we have to consider that there is an emerging non PC market for disk drives. While this is very interesting considering the DD industry's absolute slavish dependence on the Wintel model, it is going to be a while before we see some relief IMO. The emergence of set-top boxes, games, and, most importantly, PVRs, is forecasted to be only about 18 million of the 350 million drives shipped in 2003. The netcentric, or enterprise storage market is considerably more interesting however. The only problem is that the DD makers seem intent on giving the drives away to that sector.
Best,
Stitch
From a Morgan Stanley Dean Witter Investment Report:
PC Summary: PC sentiment continued to deteriorate in CQ4 as Dell, Gateway,
Apple, Intel, Compaq, and Microsoft all guided estimates lower during the
quarter. The big theme that we heard was a weaker-than expected U.S. consumer
& SMB market environment, and a lack of a meaningful sales pickup in the
historically strong end-of-year holiday period. European sales seemed to be
inline with expectations and Asia remained the fastest growing region. Now,
recession fears are weighing on the outlook for the corporate market.
All in, the key in PCs is to remember that this is an industry that is no
longer experiencing accelerating growth rates. Therefore there will always
be issues like the ones the group is experiencing today. On December 19, we
revised our unit estimates for CQ4 down to 8% Q/Q growth from 14% (see our
Cross Checks report dated December 19). CQ4 should prove to be the most
muted Q4 seasonally in many years; in the last 5 years, sequential unit
growth for CQ4s have generally been between 16-25%. In sum, we see the PC
market as going through a transition period in C1H:01.
We now look for the PC market to grow 12% in units and 1% in revenue in
C2001, versus 13% and 16% respectively in C2000.
Valuations for PC shares are trending back towards historic trading ranges
from the early 90's and may start to present trading opportunities (see our
note: When Will PC Stocks Settle: Disk Drives May Offer a Clue, dated January
11). We continue to recommend Compaq and Gateway, but note that it would not
be surprising to see Compaq reduce guidance for its C2001 outlook during Q4
earnings season, as Gateway has already done. |
