Barclays Describes How Stronger PC Trends Help HP, Seagate And Others
There were signs of the PC market bottoming in the coming months, Barclays’ Mark Moskowitz said in a report.
IDC published its preliminary PC market estimates for the June quarter on Monday. PC units were estimated at 62.4M, representing a 4.5 percent y/y decline. Analyst Mark Moskowitz noted that the previous estimate was at 59.2M, implying a 9.4 percent decline. He added, “Despite the better trend-line, we point out that IDC's estimates are preliminary and could be revised up or down in the coming weeks.”
Slowing Rate Of Decline
The projected 4.5 percent decline in PC units compares with y/y declines of 12.5 percent in the March quarter and 11.4 percent in the December quarter. The slowing rate of declines may be signaling a bottom in the coming months, Moskowitz commented.
Although a single quarter cannot be classified as a trend, there is “a decent probability” of the PC market being close to “adjusting for the ill-effects of smartphones and tablet-related displacement of PCs that began more than 5 years ago,” the analyst mentioned. He added that this could set the stage for an improved PC operating environment in 2017.
Implications For Companies
- Western Digital Corp (NASDAQ: WDC) and Seagate Technology PLC (NASDAQ: STX) would benefit from stronger PC trends. While PCs generated less than 50 percent of revenue for HDDs, the end market had been “an important bogey for the stocks,” Moskowitz said.
- HP Inc (NYSE: HPQ) is likely to benefit from stronger PC sales, as the Personal Systems business stabilizing may partially offset the impact of the challenges being faced by the Printing business in the near term.
- CDW Corp (NASDAQ: CDW) may also benefit in the near term due to its exposure to PC trends as well as its US centric model. “We note however that CDW reduced its Chromebook exposure in recent quarters,” the analyst added.
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