"We believe back to school PC demand has been virtually absent," says Sterne Agee's Vijay Rakesh in a critical note on Intel (INTC). Moreover, Sterne thinks high inventories and weak demand are pointing to the absence of a holiday season sales boost (normally 5%-7%) as well.
Rakesh now sees PC sales falling 10.7% Y/Y in Q4, worse than a prior forecast for a 9.6% drop. He also questions the ability of smartphone/tablet CPU sales to offset declining PC CPU sales for Intel, given notebook processors typically sell for several times as much as their mobile counterparts. Oddly enough (given Nokia's limited smartphone share), Rakesh also suggests the Microsoft-Nokia deal is a negative for the chip giant.
In August, IDC lowered its 2013 PC shipment growth forecast to -9.7% from a prior -7.8%. The firm estimates PC shipments fell 11.4% Y/Y in Q2 (Gartner is at 10.9%), and has predicted tablet shipments (aided by seasonality) will exceed PC shipments in Q4.