LCD Sales Glut Even Worse Than Expected? (DELL, GLW, HPQ)

Includes: DELL, GLW, HPQ
by: William Trent, CFA
Thursday's Digitimes brought bad tidings for PC manufacturers in the form of an unusual sequential sales decline in the second quarter. And since notebook computers all have an LCD display, it doesn’t help ease the panel glut either.

According to the article:

Taiwan’s leading notebook manufacturers - Quanta Computer, Compal Electronics, Wistron and Inventec - may see revenues in the second quarter drop or remain flat sequentially, despite the fact that second quarter performance should be seasonality better than the first quarter, according to market sources.

The four leading notebook makers all posted on-month sales declines in May, with a drop ranging between 15-27%, according to company filings with the Taiwan Stock Exchange (NYSE:TSE). Quanta even saw an on-year sales decrease of 6.5% last month, whereas Compal managed a slight increase of 4.9%. In contrast, Wistron and Inventec performed better than the two leading notebook players in on-year revenue growth in May, with Wistron recording a 44% increase and Inventec having 37% growth.

Historically, the perfomance of notebook makers generally bottoms out in the first quarter with a pick up in revenues starting from the second quarter, according to industry sources. The sources describe the companies’ May performance as “unusual” and blamed slow demand in the worldwide PC market.

GLW 1-yr chart:

GLW 1-yr

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