William Trent_

The Decline of the PC: Computers No Longer a Growth Industry

Total shipments for the industry were up 7.4%, or slightly above nominal GDP. That is an "industry," not a "growth industry."

And as the pricing chart (from the Bureau of Labor Statistics industry PPI data) shows, prices have been falling by more than 10%. Therefore, 7.4% unit growth less 10% price declines means that revenue is falling, not growing at all.

It is important not to mix up prices and units when discussing the industry's growth or lack thereof.

The Decline of the PC: Computers No Longer a Growth Industry

I think it will drive sales even more than people are expecting, but not for a while. In the meantime, the time to invest will be when the Vista bulls throw in the towel. Look for MSM stories on the Vista failure, then buy.

The Decline of the PC: Computers No Longer a Growth Industry

3% of the industry growing at 30% contributes 1% to overall PC "industry" growth. While Apple is a growth company, that says nothing about the PC industry.

We'll see in the Fall whether PC companies can command any extra profits from Vista-ready PCs.

Has Dell Hit Rock Bottom?

As we said there aren't really competitors - Lenovo is too opaque for us and HPQ is mostly consumer/overseas compared to DELL's US business base.

We are somewhat comfortable with the overall industry trends as well given Microsoft's early Windows Vista order trends, which should support overall tech spending next year (as we outlined

Given the hubbub over HPQ's pretexting there may be a chance to turn the tables here and go long DELL, short HPQ, but we're taking the weenie approach with our short put position.