PC Business Down the Tubes

Yesterday I wrote that investors should not be fooled by the increase in New Orders for Computers & Electronic Products in the most recent manufacturing report (read that post).

Prompt confirmation was provided today:

• Lenovo (LNVGY.PK) surprised by indicating they are now expecting a quarterly loss. They further indicated that they will be cutting 2500 employees or 11% of the workforce. The company pointed to lower demand in the commercial sector and slowing sales in China, one of its main markets.
• Intel (INTC) revealed that Q4 revenue will now be below expectations: down 20% from the last quarter and down 23% year-over-year. This is lower than its previous guidance which was provided only on November 12. The company said it was impacted by slowing demand from end users and a build-up of inventory in the supply chain.

This goes to show that the PC industry is caving in. Intel was surprised by a drop in revenue over the course of less than two months. Intel is usually pretty good at predicting its quarterly numbers. This implies that December was even weaker than many thought.

It looks like a cold, hard winter for the PC industry. Maybe Intel should apply to be a bank holding company.

Disclosure: none

Comments

[rogersails:]

The root cause for the PC industry's woes may well be Microsoft. How many of you are upgrading and nursing along a 4 yr old PC because you don't want a Vista machine ? I am.

Jan 08 11:11 AM

[Jason Rines...:]

I have a four year old system because it works fine for my business needs. Now if I was a online gamer for my primary pastime as I was in 1998 that would be a different matter. The reason for drop in PC sales is deflation, period like every other sector. Economy going back to Save and Invest.


On Jan 08 11:11 AM rogersails wrote:

> The root cause for the PC industry's woes may well be Microsoft.
> How many of you are upgrading and nursing along a 4 yr old PC because
> you don't want a Vista machine ? I am.
>

Jan 08 11:21 AM

[Jolly_Rancher:]

Investing in technology is a bubble game. Very few companies have truly reliable profits, most have losses, many don't have a viable product. The ones that have profit, have a hard time keeping profit ahead of capital investment due to quickly changing technology and consumer whims. On top of that, competition is eating this industry alive, except for Microsoft which hasn't produced much in the way of PC Windows/Office innovation in a decade or so. Why invest in this sector? Way too risky...too few profits. Biotech/pharma looks much better. Dow paying 10% looks pretty good too.

Jan 08 11:47 AM

[stox2buy:]

The prime time of investment opportunities for the so called: TECHNOLOGY sector, namely computer/network/inter... and personal devices and enterprise software(ERP) was long gone.

The next big thing coming is stem cell based regenerative medicine, this is a huge field as big as TECHNOLOGY if not bigger. From the hardware(tools) to treatments to drugs, this is the golden opportunity for those who do some study, dig in further, a lot have been going on yet a lot more will be happening as the new year unfolds especially in "adult stem cell" area.

Investment in tools, treatments or drugs now is like investment in TECHNOLOGY a decade ago in hardware, software and internet/mobile devices.

Investment in stem cell exectraction/preservat... tools is the safest and the 1st to be rewarded, then treatments and then in drugs. Treatments and drugs will have the biggest winfall but they are further down the pipeline in terms of timing.

Disclosure: long tool stock (KOOL), lurk on a few stocks in treatment and drug with stem cell/regenerative medicine flavor.

Jan 09 12:24 AM