Signs of Life in the Personal Computer Market

The personal computer market, which experienced tremendous growth during the pandemic, has faced a slump in sales over the past few months. With consumers stocking up on new laptops during the work-at-home era, and enterprise spending hampered by budget constraints and reduced office occupancy, the industry has encountered challenges compounded by excess channel inventory.

According to Gartner's data, PC sales witnessed a decline of 16% in 2022. The downward trend continued in the first and second quarters of 2023, with further drops of 30% and 17% respectively.

However, there is a glimmer of hope on the horizon. Taiwanese laptop manufacturers Acer and Asus, who report their revenue on a monthly basis, have recently revealed a surprising upswing in sales for July. Acer experienced a 1.5% increase compared to the same month last year, marking its first year-over-year growth since June 2022. Similarly, Asus witnessed a 7% rise in sales from a year ago, marking its first year-over-year increase since September of the previous year. Gartner's data reflects Acer's sales decline of 21% in the June quarter and Asus's sales decline of 17%.

These early indicators suggest a potential revival in demand in the personal computer market after a period of decline.

UBS Analysts: Positive Signs for Tech Industry Amidst Apple Concerns

UBS analyst David Vogt has recently commented on the latest reports from Acer and Asus, stating that although "one month doesn't make a trend," these reports follow a generally positive trend seen in the April quarter earnings reports of their rivals Dell Technologies and HPInc.

During their financial results announcements, Dell mentioned that their inventory situation has returned to normal, while HP predicted an improvement in market conditions for the second half of the year.

Vogt believes that the revenue data for July should be seen as a positive sign for the industry overall, despite some concerns expressed about Apple's Mac sales in the September quarter. In fact, Luca Maestri, Apple's CFO, revealed during their recent earnings call that Mac sales are likely to experience a double-digit decline in percentage terms compared to the same quarter last year.

According to FactSet estimates, HP is expected to report a 13% decline in sales from its Personal Systems Group for its July quarter. Similarly, Dell's Client Solutions Group sales are anticipated to decline by 22%.

HP will release its July quarter financial results on August 29, while Dell's report is scheduled for August 31.