Tue, Sep 11, 2012 - Page 14 News List

Nomura cautious on PC sales after Intel revision

WEAK PROSPECTS:The brokerage now forecasts a 1 percent drop in global PC shipments this year, after the chip giant warned of a slowdown in PC demand

Staff writer, with CNA

The outlook for the global PC hardware sector remains challenging following US chipmaker Intel Corp’s revision of its quarterly sales forecast, Nomura Holdings said in a research note on Sunday.

Hurt by slowing demand, Intel on Friday cut its third-quarter revenue outlook to US$13.2 billion, plus or minus US$300 million. That compares with its previous estimate of between US$13.8 billion and US$14.8 billion.

Although most investors are aware that demand in emerging markets is slowing down, Intel’s prediction that enterprise PC demand — which has posted stable growth so far this year — would decline in the third quarter surprised many, Nomura said in the note.

As a result, Nomura cut its global PC shipment forecasts for this year to a decline of 1 percent, from its previous estimate of 5.5 percent growth. It also lowered its growth forecast for next year to 7 percent from its earlier estimate of 12 percent.

“While many investors still hope that Microsoft’s Windows 8 official launch could help boost sales in the fourth quarter of 2012 for the PC supply chain, we retain our conservative view of the PC industry,” Nomura analyst Eve Jung (戎宜蘋) wrote in the note. “We are concerned that tablets will continue to cannibalize notebook sales in the longer term.”

The main reasons for Nomura’s cautious view include the improving functions of Google Inc’s Android and the Windows 8 systems for tablets, and the lower prices of tablets compared with notebooks, Jung said.

Intel’s slow promotion of Ultrabooks could also negatively impact the overall growth of notebook sales, she wrote.

Nomura added that there was a higher risk of notebook original design manufacturers (ODM) revising down their third-quarter shipment guidance.

The brokerage kept its “reduce” stock rating on Compal Electronics Inc (仁寶) and Wistron Corp (緯創), citing slowing notebook sales and likely further margin pressure in the second half.

Nomura also retained its “neutral” rating on Quanta Computer Inc (廣達), given the firm’s slowing growth momentum from Apple’s notebook business.

For PC brands, Nomura maintained its “reduce” rating on Acer Inc (宏碁) based on the company’s continued low exposure to the tablet market and slow progress in improving margins and regaining market share.

The brokerage said slowing enterprise demand could also be a drag on Lenovo Group Ltd’s (聯想) overall margin performance, as margins in the commercial segment are higher than those in the consumer segment.

However, Nomura was optimistic about Asustek Computer Inc (華碩), citing the company’s growing market-share gains in China and emerging markets, ability to benefit from rising tablet demand because of its design strengths and continued margin expansion.

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