While the worldwide personal computer industry enjoyed a fourth consecutive year of growth in 2006, investors should note that PC shipments in the U.S. increased a lackluster 3%, compared to hearty growth of an estimated 17.6% in per unit shipments in the Asia-Pacific region and even more robust 22.2% growth in Eastern Europe, Latin America and the Middle East. Standard & Poor's Equity Research sees the overall growth continuing for a fifth year in 2007 with 11% total unit growth.
"General industry data suggest that growth has been strong for the PC industry, but this is somewhat misleading," noted Scott Kessler, Technology Sector Group Head at Standard & Poor's Equity Research. "International markets are now critical to growth. Hewlett-Packard and Acer benefited from gains in Europe, the Middle East and Asia (EMEA), and Lenovo added market share in Asia-Pacific, while Dell, which has extensive U.S. market exposure, experienced a decline in units. We still see our 11% growth target as attainable, but investors should recognize that a number of variables, such as a decelerating global economy, sluggish enterprise spending, high energy prices and a continued housing market slump, could have a negative impact."
New operating systems from Microsoft Corp. (Vista)and Apple Inc. (Leopard), along with further overseas development and the move towards notebook computers, will likely stimulate PC industry demand. Standard & Poor's Equity Research believes that prospects for Apple, which is ranked "Strong Buy" (5-STARS out of 5), are the brightest. The company's Macintosh (Mac) line of PCs is benefiting from multiple factors, including increased processing power from a switch to Intel- based chips, and its "boot camp" feature, which allows users to work in a Microsoft Windows-based environment.
