To All, Gateway revenue and others vs. my thesis of weaker pc sales growth in Q4.
1. First, note that Gateway missed the consesus revenue projections, so all is not wonderful with this report. It was not a disaster but it was below what analysts thought, with guidance from the co., was going on.
2. As I said in a note last week, Gateway is not indicative of what is going on as they are mainly a consumer seller and that market has not crashed nearly as badly as the larger business segment. Still, up 17% revenues were more than I expected from them. They claim that is twice as large as the market growth, which, in consumer pcs was about 12% and in business pcs about Death Valley. Neither number, and I have no idea what the final sell-through on business pc revenues will be yet, other than bad, supports the concept that 17% growth is double the market number. It looks to be much larger for the entire market and much smaller for the consumer market.
3. IBM numbers, though more supportive of my position, are also not relevant, as they are one of the channel stuffers. Ditto for Compaq #s, which I also expect to be fakey good. Dell could be relevant, as they neither have a channel nor are they big time in consumer pcs. The horrible numbers from the channel are also relevant. But the real test, IMHO, will be 1Q for the component geeks. My guess is nary a thing will be ordered this quarter given the glut of boxes. I expect to hear announcements to that effect soon.
4. I have some questions about Gateway's revenues, but the earnings appear to be totally fictional. That doesn't really matter to my thesis on the industry, revenues do, but I just thought I'd mention that their income statement either means that Gateway totally reinvented itself last quarter or there is some sharp pencil work. The expenses and the sales simply don't jive.
Summary: There is no question that unit pc sales growth on the consumer side shot up like weeds while revenues were well below the trend of growth for the industy, and nearly as low as the 10%recession level in 1991. But the proof of the disaster is in business sales. I plan to do a thorough job on Dell's report when it comes next month.
MB |
