As the computer hardware industry continues to grow, Standard & Poor’s Equity Research Services sees it as a tale of two markets — the U.S. and non-U.S. Consumer. Price competition and a slowdown in commercial orders, driven by middling corporate sales, has led to decreased growth from the U.S. computer hardware industry. At the same time, Asia and Europe have experienced rising sales of PC units, particularly for notebooks, as well as servers. These and other findings are available in a semi-annual report titled Computers: Hardware Industry Survey (US$695), published by Standard & Poor’s, a leading provider of financial market intelligence.
While the worldwide personal computer industry enjoyed a fourth consecutive year of growth in 2006, investors should note that PC shipments in the U.S. increased a lackluster 3%, compared to hearty growth of an estimated 17.6% in per unit shipments in the Asia-Pacific region and even more robust 22.2% growth in Eastern Europe, Latin America and the Middle East. Standard & Poor’s Equity Research sees the overall growth continuing for a fifth year in 2007 with 11% total unit growth.
“General industry data suggest that growth has been strong for the PC industry, but this is somewhat misleading,” noted Scott Kessler, Technology Sector Group Head at Standard & Poor’s Equity Research, in the press release. “International markets are now critical to growth. Hewlett-Packard and Acer benefited from gains in Europe, the Middle East and Asia (EMEA), and Lenovo added market share in Asia-Pacific, while Dell, which has extensive U.S. market exposure, experienced a decline in units. We still see our 11% growth target as attainable, but investors should recognize that a number of variables, such as a decelerating global economy, sluggish enterprise spending, high energy prices and a continued housing market slump, could have a negative impact.”
New operating systems from Microsoft Corp. (Vista) and Apple Inc. (Leopard), along with further overseas development and the move towards notebook computers, will likely stimulate PC industry demand. Standard & Poor’s Equity Research believes that prospects for Apple, which is ranked “Strong Buy” (5-STARS out of 5), are the brightest. The company’s Macintosh line of PCs is benefiting from multiple factors, including increased processing power from a switch to Intel-based chips, and its “boot camp” feature, which allows users to work in a Microsoft Windows-based environment.