PCs Worse Than Expected: Even Asia Has Stopped Buying
PC shipments worse than expected ... even Asia has stopped buying.
Is it a surprise that PC shipments are declining? No, but two things stand out: the magnitude of the decline was steeper than expected, and now the Asians have stopped buying. That's news.
Worldwide PC shipments dropped 13.9 percent, compared to the same quarter in 2012, much worse than the forecast decline of down 7.7 percent, according to IDC. Apple PC shipments are down, but not as much as Dell or Hewlett-Packard.
This was the steepest decline ever in a single quarter ... IDC has been tracking PC shipments since 1994.
The decline may not be shocking in the U.S., but the magnitude was big (12.7 percent decline year-over-year (YOY). and THIS is a surprise: a 12.7 percent decline YOY in Asia (ex-Japan). THAT was unexpected, the first double-digit decline in Asia ever.
This has implications beyond Microsoft, where weak sales of Windows 8 is taking much of the blame. The cannibalization trend is accelerating in consumer PCs as mobile device performance has improved. The good news is that most component makers make chips for both markets.
What to do if you're a tech trader? There was the Apple trade for years, but that's not working ... so what to trade? Even Broadcom got a downgrade at Barclays. There's some interest in security names like Symantec, SourceFire, Palo Alto Networks, Fortinet—which missed earnings estimates last night on weak government spending.
Among traders, it is widely believed that some of the recent rise on Wall Street is due to waves of Japanese buyers coming into the U.S., supplementing the European buyers already here. There hasn't been a lot of data to support the belief. An article in today's Financial Times throws some doubt on this: Weekly data from Japan's Ministry of Finance indicated that Japanese investors dumped foreign bonds recently.
Note these are bond sales, not stock sales, but the belief that Japanese investors would go on a yield-hunting buying spree outside Japan is a commonplace, and a lot of non-Japanese investors have been front-running that anticipated buying by shorting the yen.
Strange. Personally, I find it hard to believe the Japanese investors would not be buying outside Japan. It doesn't make sense not to.
2) Retail same-store sales: Who cares? I'm sorry, it just doesn't matter much anymore. No J.C. Penney. No Target. No Wal-Mart Stores. One by one, they've all stopped reporting monthly sales. Of roughly 120 publicly traded companies, only 14 still report monthly same store sales. Sigh.
3) Oh my! I found a company that says they are hiring ... maybe. Buried in Pier 1 Import's earnings report this morning was this statement: "This year, we will be making prudent investments, including additional headcount, to support our growth." Earnings were in-line, and it will continue its share repurchase program.
—By CNBC's Bob Pisani