New fortnightly markets column
Chris Woodcock monitors the markets, keeping a careful eye on the biggest technology stocks in the world. Every fortnight he’ll bring you his latest insights on market movements and more.
This week Chris takes us through the start of the tech earnings season, and explains why some of the biggest tech giants are continuing to tumble.
Anyone who has had good use from a smartphone or a tablet in recent years would have no trouble in predicting problems for the PC industry, and those voices have been no different in the financial markets.
PC Shipments finally cracked
Hewlett Packard, the world’s largest PC maker, was one of the worst performing large companies in the stock market in 2012. Its value almost halved.
Until this quarter though, the data seemed to show that like Mark Twain the death of the PC had been greatly exaggerated.
Not anymore. A report from Gartner, an IT research firm, last week showed PC shipments had finally cracked, falling as much as 11% compared to the first quarter of 2012.
That might not seem too disastrous, but consider the fact that personal computing devices have grown eerily steadily at 14% per year and it suggests as much as a quarter of demand has disappeared within a year.
Intel slips 34%
Another company struggling to adapt to the new era is Intel. As has become customary, they kicked off the first quarter reporting ‘season’ on Tuesday night (the three week period in which most public companies publish their accounts for the last three months).
With this backdrop of falling PC sales it was never going to be a bumper quarter and so it proved with profits falling a staggering 34% from last year.
They are predicting a recovery when their next generation processors coming out in the summer start to drive sales of tablets, phones and ultra-thin laptops.
It takes something of a leap of faith to accept this though. So far Intel processors have been almost entirely absent in mobile devices.
The financial markets have a reputation for being cutthroat and whilst I would not always agree they are certainly unsentimental.
Intel is one of the world’s most sophisticated engineering companies, designing incredibly powerful computer chips at nano scale. They have been at the forefront of computer processing technology since the 1960s and in 2012 raked in nearly $50 billion from sales of their clever circuitry.
By any measure, it is a phenomenal company. But unless they can build a credible presence in low power, mobile processors their best days will remain behind them and reports of falling sales will become the norm.
Media disruption
The computer industry is not the only one that is feeling the effects of what have been described as ‘techtonic’ shifts (get it?).
The interaction of mobile, social and cloud computing is also reshaping the media world in profound and as-yet unknown ways.
It’s perhaps reassuring, then, to know that even executives of the biggest firms do not know how it will shake out either.
Dish Network of the US, a satellite TV company, surprised the market over the weekend by launching a $25 billion bid for Sprint, a large mobile network operator (the UK equivalent would be Sky bidding for EE).
The crystal ball of Dish’s chairman Charles Ergan shows us all watching his programs on computers, phones, tablets, watches and probably Google Glasses too and he figures for a broadcaster to have a role it must become the network.
It’s not widely known, but Dish is something of a maverick in the US media world. In the past it has fought a powerful advertising lobby to give us such innovations as the DVR (Sky+). Their bid for Sprint is a reminder that watching what they do in the next five years is likely to be very instructive.
Chris Woodcock has over five years experience of analysing top technology stocks, he now manages his own independent research firm Cedilla Research. He writes his markets column every fortnight at Tech City News.
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