Skip to main content

OK, Gartner, where's the growth in PC sales?

The Advance Report for Durable Goods for October was released on Wednesday; Bloomberg characterized it as "tepid". That was a fair statement. As usual, we'll zero in on the Tech sector and see how the hardware vendors performed.

Shipments --

Typically, investors pay the most attention to shipments and new orders. This first chart shows the results for Computers and Electronics Products which is the summarized category encompassing most high tech hardware manufacturing including computers, peripherals, storage, semiconductors, communication and networking equipment.




It's a relief to see shipments increasing after two months of declines. Not only that, there seems to be confirmation that the lows are now behind us.

This next chart shows shipments for the Computers and related products sub-category.



Ouch! Shipments for Computers and related products dropped to a new low. Gartner and iSuppli have not only been forecasting increases in PC sales they have been ratcheting up their forecasts for the last few months. So far, actual data is not supporting these forecasts.

Next is the chart for Communications Equipment. The numbers include both defense and non-defense equipment.



There has been some worry about this segment. With the perception that the new administration in Washington is less likely to support the defense industry, it is perhaps some surprise that shipments are up reasonably strongly here.

This next chart shows Semiconductor shipments.



Semiconductors were the stars in October. Shipments increased 25% month-over-month and seem to confirm the up-trend that started during the summer.

New Orders --

Now for the forward looking measure. This next chart shows New Orders for the tech sector as a whole.



This is not particularly encouraging. New Orders are down for the third month in a row. We are not approaching new lows but the up-trend certainly doesn't look particularly strong.

Our next chart shows new orders for the Computers and Related Products sub-category.



As with Shipments in the chart presented above, we see a significant drop off in New Orders, a decline of 7.2% month-over-month.Once again, we are within a hair of a new low. When are those rosy forecasts going to kick in?

Our last chart, New orders for Communications Equipment, is presented below.



The slight decline in October is at least better than the sizable decline we saw September.

Conclusion --

Tech has been underperforming gold and materials over the last couple of months and a few of these charts help to explain why.

Despite the buzz around smart phones, PC sales being driven by the release of Windows 7 and positive results and outlooks from bellwethers like Cisco Systems (CSCO), Intel (INTC) and Hewlett-Packard (HPQ), it appears that the hi-tech hardware sector is still limping along with inconsistent results.

The silver lining in this cloud, however, is the semiconductor sector. Most hardware is dependent on semiconductors. With shipments up so strongly in the chip sector, it suggests that the other sectors will soon see some of the growth that Gartner and others are predicting.

Let's hope those forecasts are right.


Disclosure: long ROM and USD

Comments

Popular posts from this blog

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...

The Trouble with Trend Reversal Indicators

Many of us use various trend reversal indicators to time our trades. Our desire is to determine when prices have changed direction so that we can ride the new trend. Why doesn't it always work out? The first reason, of course, is that unforeseen events often drive prices in unexpected directions. That is something we can't change and it often makes all of us technical traders crazy. On the other hand, sometimes an unforeseen event is a prelude to a new trend. A stock spikes up on a what seems to be a one-time piece of good fortune and soon falls back. Does it start making its way back up or does it resume a previous down trend? The conflict within trend reversal indicators is that, though they can definitely tell when prices change direction, they suffer from two problems. One, they often can't determine how significant that move in prices actually will be. Two, they are often lagging indicators. As such, they can be late in providing a signal, sometimes leading the investo...

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what...