Microsoft, Computer Makers May Be Hurt as Floods Crimp Sales, IDC Says
Hewlett-Packard Co. (HPQ), Lenovo Group Ltd. (992), Dell Inc. (DELL) and Microsoft Corp. (MSFT) are among companies that may be hurt this quarter and in 2012 as flooding in Thailand strains personal-computer supplies and raises prices, IDC said.
PC shipments will decline between 2.2 percent and 3.4 percent in the fourth quarter from a year earlier, down from a prior forecast for 5.1 percent growth, IDC said today in a report. In the first quarter, shipments may drop by 1.8 percent to 13.4 percent. IDC had projected a gain of 8.2 percent.
Rising waters have swamped industrial parks in Thailand where companies like Western Digital Corp. (WDC) and Toshiba Corp. make about a quarter of the world’s disk drives. The PC industry, already weighed down by concerns about a weak economy and the surging popularity of tablets, would usually be in “peak production” ahead of holiday demand right now, IDC said.
“A lot of these plants are still under water, and it’s unclear how much damage they will find when the water recedes,” Loren Loverde, an analyst at IDC, said in an interview. “It’s also unclear how quickly the cleanup can begin and how much time it will take to bring in replacement parts to rebuild.”
The flood has caused drive prices to increase by $10 to $25, Seagate Technology Plc (STX) Chief Executive Officer Steve Luczo said in an interview. That could rise further, he said.
“If you’re thinking of buying someone a laptop for Christmas, I’d buy it now,” Luczo said. Seagate’s plants haven’t been flooded, though the company has seen its supply chain disrupted.
Goldman Sachs Forecast
IDC’s reduced forecast comes a day after Goldman Sachs Group Inc. (GS) cut its own forecast for PC shipments for the fourth quarter and next year. PC shipments will decline 3 percent this quarter compared with a year earlier, down from a previous estimate for an increase of 3.1 percent, Goldman analysts said in a note yesterday.
First-quarter shipments will drop 8.5 percent, compared with an earlier projection for an increase of 4 percent. For all of 2012, shipments will rise 3.3 percent, Goldman Sachs said, down from a previous forecast for an increase of 4.3 percent.
As a result, Goldman Sachs also pared its estimates for Microsoft’s profit and sales. All server, storage and PC sellers may experience some higher costs as a result of the hard-drive shortages, Goldman Sachs said.
Palo Alto, California-based Hewlett-Packard was the world’s biggest PC seller in the third quarter, according to IDC, followed by Lenovo and Dell.
Smaller computer makers will bear the brunt of the disruption in Thailand, as larger manufacturers will get first crack at the available drives, IDC’s Loverde said. Even so, Hewlett-Packard and the bigger vendors still will see supply constrained and are likely to funnel the drives they have into higher-profit products, such as server computers and pricey laptops, and away from cheaper netbooks and mini-notebooks, he said.
In the third quarter, total PC shipments rose less than forecast, dragged down by disappointing back-to-school sales, a sluggish economy and a shift to tablets and smartphones. Framingham, Massachusetts-based IDC said global sales rose 3.6 percent, below the 4.5 percent growth it had predicted.
Computer memory-chip maker Hynix Semiconductor Inc. (000660) said last month that the disaster may trim computer shipments in the first quarter.
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