Friday, January 16, 2009

2008 Up's and Down's

Gartner and IDC released preliminary 2008 PC shipment numbers. They might be down now but that doesn’t mean people should write off Microsoft future earnings because of them. There were six years of growth following the decline during the late 2000 to early 2002 recession. The fourth quarter is usually the strongest for PC shipments because of holiday sales.

In October Microsoft forecast second-quarter revenue between $17.3 billion and $17.8 billion operating income between $6.1 billion to $6.4 billion and 51 cents to 53 cents earnings per share. The last time Microsoft had a big miss was during the last recession. Microsoft is going to try to avoid the layoffs.

Microsoft will be making more investments this year and is focusing on R&D investing more than $8 billion last year alone. Starting the new IT marketing campaign focusing on value will help for the new investments. Microsoft will still have trouble getting customers to continue investing in new technology when pulling back investments.

During this recession and the last there have been some mart similarities. In 2000 PC shipments were strong during the first half of the year then went really bad during the fourth quarter when holiday sales were generally off for all manufacturers. Compaq, Gateway and other OEM’s also had a steep computer sales decline and most PC makers selling through retail saw their inventories pile up.

When changing sales it will reshape which PC manufacturers and categories will dominate. Acer is becoming very popular name everywhere. Acer, Asus got first-to-market advantage which paid off in a growing category. Over the year Acer PC shipments grew more than 53 percent worldwide. It was almost double Apple’s year-over-year gains.

Portables have still been selling well despite the contracted growth. After three quarters of 40 percent or more growth the notebook shipment dropped. Even though the fourth quarter brought down sales for 2008 the worldwide PC growth was 10.5 percent.

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