Amid Continued Weakness in PC Shipments, Related Stocks Holding Up
Up)
While fourth-quarter estimates for PC shipments have recently come down -- down below the level reported during the fourth quarter of 2010 -- stock prices have seemingly been shrugging off this trend.
According to research firm Gartner, PC shipments in the fourth quarter likely fell 1.4 percent to 92.2 million units. Much of the weakness can be attributed to sovereign debt issues in Western Europe which caused volatility in markets and consumers and corporations to hang onto their money a little more tightly. One Gartner analyst noted hard-disk drive shortages from the October 2011 Thai floods didn't even hit the market in the fourth quarter; these PCs were likely already built before then.
Consequently, Gartner sees a broader impact on PC shipments from HDD shortages moving into the first quarter of 2012 and potentially lingering through much of 2012. Back in December, Gartner reduced its 2012 PC shipments growth estimate from 4.6 percent to just 2.2 percent.
At the Consumer Electronics Show in Las Vegas earlier this week, a warning from a Microsoft (Nasdaq: MSFT) exec seemed to also hint at further weakness into 2012. Microsoft's Investor Relations GM Bill Koefoed more recently echoed the sentiment, saying, "you'll likely see that number decline further as the impact has been felt faster than people had anticipated."
Stocks in the HDD and semi sectors which were impacted the most following the Thai flooding have now, for the most part, erased losses and then some. Seagate (NYSE: STX), for example, plunged as much as 44 percent from July to October; the stock is now up an additional 14 percent above where the stock was trading prior to the Thai flood concerns were first heard. The Market Vectors Semi ETF (NYSE: SMH), after falling about 20 percent to end the summer, has now rebounded about 18 percent.
With investors seemingly eager to get some PC exposure back in their portfolios, even moderate weakness in PC shipments going forward could be a "look out below!" signal for related stocks.
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According to research firm Gartner, PC shipments in the fourth quarter likely fell 1.4 percent to 92.2 million units. Much of the weakness can be attributed to sovereign debt issues in Western Europe which caused volatility in markets and consumers and corporations to hang onto their money a little more tightly. One Gartner analyst noted hard-disk drive shortages from the October 2011 Thai floods didn't even hit the market in the fourth quarter; these PCs were likely already built before then.
Consequently, Gartner sees a broader impact on PC shipments from HDD shortages moving into the first quarter of 2012 and potentially lingering through much of 2012. Back in December, Gartner reduced its 2012 PC shipments growth estimate from 4.6 percent to just 2.2 percent.
At the Consumer Electronics Show in Las Vegas earlier this week, a warning from a Microsoft (Nasdaq: MSFT) exec seemed to also hint at further weakness into 2012. Microsoft's Investor Relations GM Bill Koefoed more recently echoed the sentiment, saying, "you'll likely see that number decline further as the impact has been felt faster than people had anticipated."
Stocks in the HDD and semi sectors which were impacted the most following the Thai flooding have now, for the most part, erased losses and then some. Seagate (NYSE: STX), for example, plunged as much as 44 percent from July to October; the stock is now up an additional 14 percent above where the stock was trading prior to the Thai flood concerns were first heard. The Market Vectors Semi ETF (NYSE: SMH), after falling about 20 percent to end the summer, has now rebounded about 18 percent.
With investors seemingly eager to get some PC exposure back in their portfolios, even moderate weakness in PC shipments going forward could be a "look out below!" signal for related stocks.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
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