Why Microsoft and Intel are Leading the Dow Today

PC systems like this batch of Dell hardware aren't dying as fast as you might have thought.

The two strongest performers on the Dow Jones Industrial Average (DJINDICES: ^DJI  ) today come from the tech sector. Microsoft (NASDAQ: MSFT  ) and Intel (NASDAQ: INTC  ) shrugged off the morning's disappointing jobs report to both add about 1% to their share prices. The Dow itself had slumped more than 0.2% just before 2 p.m. EST, and the third-strongest gainer, Coca-Cola, delivered only a 0.7% jump.

This time, there's a perfectly reasonable catalyst behind Intel's and Microsoft's Dow-beating performances. Independent market researchers IDC and Gartner just released their estimates of worldwide personal computer shipments in the holiday quarter, and they weren't as bad as investors had feared.

Gartner saw about 82.6 million PC systems sold in the fourth quarter of 2013, while IDC stopped at 82.2 million. The differences come from each service estimating some numbers in cases where the system builders' fourth-quarter reports haven't hit the newswires yet.

That said, both firms agree that the global PC market shrank no more than 7% year over year. Gartner said that some markets, including the crucial U.S. reports, may have bottomed out by now. Tablets keep stealing market share in emerging markets, but American consumers and corporations might have now reached their ideal tablet-to-PC balance.

IDC and Gartner also agreed that Hewlett-Packard (NYSE: HPQ  ) is losing market share in America to hungrier vendors like Lenovo and the privatized Dell. This should come as no surprise, given HP's refocus on software and services under CEO Meg Whitman, but HP shares still tumbled 0.7% on the market reports. I'm not sure that's entirely fair, but then HP investors have plenty of reason to be nervous these days. Turnarounds are always tricky, and HP's is thornier than most.

This qualifies as relatively good news for the PC industry as a whole, as the fourth-quarter declines were smaller than the full-year percentage drops. The streak of seven consecutive quarters with negative growth may be coming to a close, leaving the PC market stable enough to support Intel and Microsoft at current share prices.

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  • Report this Comment On January 10, 2014, at 2:41 PM, emilykulish wrote:

    When HP launched Chromebooks and Android tablets, Microsoft bashers were so happy. Now HP is sinking even faster.

    Meg Whitman is clueless: Google is a Trojan horse in the software, device and service industry. Their free software or service is like a drug, eventually will kill HP - because Google does not need any revenue from software, hardware or service, as long as it has a monopoly on search.

    Chromebook is web-based. It cannot do anything better than a PC, and it has much fewer features, it limits your choice as you are only allowed to use web based apps, you cannot use any competing browsers, and most of PC peripheral devices won't work.

    Now, the real killing part is, instead of creating more values like Apple and Microsoft do, Android / Chromebook is competing on "rush to the bottom", with devices selling for only $299 or even lower. Whether Google charges license fee or not, the profit margin will be much smaller than a full-blown laptop.

    What's even worse, if a laptop is merely a web browser, then it completely defeats the purpose of buying a high-end laptop, or upgrade to a faster laptop. When that happens, Chomebook manufacturers will quickly lose momentum. (Intel will also suffer!) By embracing Chromebook, the PC OEMs are killing themselves slowly. I guess they just realized they are doomed in anyway.

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