PacCrest Analysts Lower PC OEM Estimates En Masse

Pacific Crest Securities issued an industry note on the technology sector following a reduction to Notebook ODM forecasts. Analysts Brent Bracelin and Alyssa Johnson highlighted Advanced Micro Devices Inc. AMD, HP Inc. HPQ, Intel Corporation INTC and Microsoft Corporation MSFT and lowered estimates for each company.

The analysts wrote, "Given our expectations for a material shipment miss at notebook ODMs in January and Q1, driven by excess notebook inventory at PC OEM customers due to weaker-than-expected sell-through in Q4, we are lowering estimates for AMD, HPQ, INTC and MSFT...Should forecasts hold, 1Q16 would have the largest sequential decline (-26 percent q/q) in notebook ODM unit shipments ever."

Pacific Crest noted that the large reduction in shipments of Notebooks was caused by excess inventory at PC OEM customers. This could be a sign of decreasing consumer demand for these hardware products and has the potential to significantly impact the technology industry.

Pacific Crest lowered estimates for Intel and Advanced Micro Devices due to their sales exposure to notebook CPUs, and highlighted that lower PC demand could negatively impact Microsoft's highly profitable Windows and Office business.

For Hewlett-Packard, Pacific Crest sees conditions worsening in the PC supply chain which has a direct impact on their business, as well future growth opportunities.