Fortuna at Merrill on PCs, highlights
by: skeptically 03/26/01 09:48 am EST
Msg: 225878 of 225913
Highlights:
• We are reducing our worldwide PC unit growth forecast for the current
year to 7.0% from 12.5% previously. All of our checks suggest that PC
demand remains weak, especially in the U.S. Though there are some
glimmers of hope coming out of Taiwan, the data are inconclusive and it is
too early to draw any conclusions. However, to the extent that this year
proves to be weak, we feel next year could be surprisingly strong in light of
the current deferrals coupled with a number of important growth drivers in
place. These include Win2K, Y2K refresh, small business, and Europe.
Therefore, we are raising our 2002 worldwide growth forecast to 15.5%
from 12.8%. Our new revenue growth forecast for 2001 and 2002 is -2.8%
and +8.1%, respectively.
• By geography, our U.S. unit growth assumption goes to 1.0% from 7.5%,
Europe goes to 5.0% from 8.5%, Japan goes to 12.0% from 19.5%,
Asia/Pacific goes to 17.0% from 23.5%, and ROW goes to 12.5% from
15.5%.
• We believe the PC will remain the computing platform of choice within the
corporate environment for the foreseeable future – despite what many
scaremongers have been saying, the traditional PC is not going anywhere
any time soon - we do not believe in thin clients. We do, however, expect
pricing pressure to continue and, perhaps even accelerate, driven by the
decreasing marginal utility of faster processors. We continue to believe that
the small business market represents the single biggest growth opportunity
for the branded PC vendors over the next couple of years.
• On the consumer side, we expect the market could increasingly move to
lower-cost, easy-to-use, portable, (perhaps wireless) appliances in the home,
given that new consumer PC purchases are driven almost exclusively by the
desire to gain Web access.
• We continue to focus on Dell (DELL; $27.44; B-1-1-9) as our top pick in the
group owing to the company’s increasing mix of enterprise-class products.
We also believe Dell is exceedingly well positioned in the current weak
environment, given its advantaged model, to outgrow the overall market at
an even faster clip than during good demand times |
