We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will the Worldwide Shipments of PC Further Decline in Q3?
Read MoreHide Full Article
In 2020 and 2021, PC manufacturers, including HP Inc. (HPQ - Free Report) , Dell Technologies (DELL - Free Report) , Apple (AAPL - Free Report) and Lenovo (LNVGY - Free Report) , benefited from increased demand amid the pandemic-induced remote-working and online-learning wave. The pandemic necessitated the use of PC systems, be it for remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming, or online shopping.
However, with the reopening of economic activities, the demand for consumer and educational PCs is waning, which is hurting PC sales. Additionally, ongoing component shortages and logistics delays are impacting PC manufacturers’ ability to meet demand.
As a result, worldwide PC shipments have been declining for the past two quarters. According to the data compiled by Gartner, PC vendors shipped 72 million units in the April-June quarter of 2022, 12.6% lower than the year-ago quarter. Another independent research firm, International Data Corporation (“IDC”), revealed that PC sales were down 15.3% year over year to 71.3 million units in the second quarter.
Per IDC, Lenovo, HP, Dell and Apple registered year-over-year declines of 12.1%, 27.6%, 5.3% and 22.5%, respectively, in PC deliveries.
In its third-quarter fiscal 2022 results, HP revealed that total PC units sold were down 7% on a year-over-year basis, resulting in a 3% year-over-year decline in its Personal Systems revenues. Similarly, Apple reported a 10.4% plunge in Mac revenues in the third quarter of fiscal 2022.
As the aforementioned factors persist, we expect PC shipments to sustain their downtrend in the third quarter. Additionally, rising inflation is deteriorating consumers’ spending power, forcing buyers to postpone purchasing plans for PCs.
Furthermore, enterprises may postpone their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This is likely to negatively impact the demand for commercial PCs in the third quarter.
In July 2022, Gartner lowered its forecast for worlwide IT spending growth rate to 3% from the 4% mentioned earlier. The research firm had stated that the 2022 IT spending growth will be much slower than 2021 due to “spending cutbacks on PCs, tablets and printers by consumers.”
IDC’s most recent forecast for global PC shipments suggests a decline of 12.8% for 2022 to 305.3 million units. The research firm blames inflation and the weakening of the global economy for the disappointing forecast.
Considering the macroeconomic challenges, the declining trend in PC shipments for Lenovo, HP, Dell and Apple is expected to continue in the third quarter. Currently, Lenovo and Apple carry a Zacks Rank #3 (Hold). While HP carries a Zacks Rank #4 (Sell), Dell has a Zacks Rank #5 (Strong Sell).
Image: Bigstock
Will the Worldwide Shipments of PC Further Decline in Q3?
In 2020 and 2021, PC manufacturers, including HP Inc. (HPQ - Free Report) , Dell Technologies (DELL - Free Report) , Apple (AAPL - Free Report) and Lenovo (LNVGY - Free Report) , benefited from increased demand amid the pandemic-induced remote-working and online-learning wave. The pandemic necessitated the use of PC systems, be it for remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming, or online shopping.
However, with the reopening of economic activities, the demand for consumer and educational PCs is waning, which is hurting PC sales. Additionally, ongoing component shortages and logistics delays are impacting PC manufacturers’ ability to meet demand.
As a result, worldwide PC shipments have been declining for the past two quarters. According to the data compiled by Gartner, PC vendors shipped 72 million units in the April-June quarter of 2022, 12.6% lower than the year-ago quarter. Another independent research firm, International Data Corporation (“IDC”), revealed that PC sales were down 15.3% year over year to 71.3 million units in the second quarter.
Per IDC, Lenovo, HP, Dell and Apple registered year-over-year declines of 12.1%, 27.6%, 5.3% and 22.5%, respectively, in PC deliveries.
In its third-quarter fiscal 2022 results, HP revealed that total PC units sold were down 7% on a year-over-year basis, resulting in a 3% year-over-year decline in its Personal Systems revenues. Similarly, Apple reported a 10.4% plunge in Mac revenues in the third quarter of fiscal 2022.
Computer - Mini computers Industry 5YR % Return
Computer - Mini computers Industry 5YR % Return
What Lies Ahead for Q3?
As the aforementioned factors persist, we expect PC shipments to sustain their downtrend in the third quarter. Additionally, rising inflation is deteriorating consumers’ spending power, forcing buyers to postpone purchasing plans for PCs.
Furthermore, enterprises may postpone their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This is likely to negatively impact the demand for commercial PCs in the third quarter.
In July 2022, Gartner lowered its forecast for worlwide IT spending growth rate to 3% from the 4% mentioned earlier. The research firm had stated that the 2022 IT spending growth will be much slower than 2021 due to “spending cutbacks on PCs, tablets and printers by consumers.”
IDC’s most recent forecast for global PC shipments suggests a decline of 12.8% for 2022 to 305.3 million units. The research firm blames inflation and the weakening of the global economy for the disappointing forecast.
Considering the macroeconomic challenges, the declining trend in PC shipments for Lenovo, HP, Dell and Apple is expected to continue in the third quarter. Currently, Lenovo and Apple carry a Zacks Rank #3 (Hold). While HP carries a Zacks Rank #4 (Sell), Dell has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.