The death of the traditional PC has been a major trend that
has overtaken the market in 2012. It came fast, and though many
analysts were skeptical that it could happen so suddenly, it has
wrought huge effects on the businesses involved.
Intel (NASDAQ:
INTC
), Dell (NASDAQ:
DELL
), Hewlett-Packard (NYSE:
HPQ
), Microsoft (NASDAQ:
MSFT
) and most certainly AMD (NYSE:
AMD
) have all felt the effects of the titanic shift in the
industry.
Shares of Intel slumped lower Monday morning, before later
rebounding (perhaps pulled higher by the rally in the broader
market). The company was halted in the premarket, as it announced
that its CEO would retire in May. Intel has yet to name a
successor.
Intel's CEO Paul Otellini has been on the job since 2005, so
his retirement might just be a normal, periodic transition in the
company's management. But given the company's recent performance,
traders may speculate that he might have been ousted. Shares of
Intel have shed about a third of their value since May, trading
down from near $30 to around $20.
Intel has been the dominant player in the PC chip business for
years. It formed the "tel" portion of the "Wintel" neologism.
However, as the demand for PCs has fallen -- PC demand is
expected to
decline by 1.2 percent this year
-- demand for Intel's chips has likewise declined.
AMD has faced similar problems, but to an even worse extent.
AMD competes directly with Intel in the chip department, but is a
minor player in both market share and size of the company. AMD
shares have dropped below $2, and there have been reports that
management could be entertaining thoughts of selling the company.
AMD has shot down those reports, but the collapse in AMD's shares
is undeniable.
Dell and HP, as the end-producers of Wintel machines, have
likewise suffered. Dell reported disappointing earnings last
week, sending shares briefly below the $9 mark.
HP is set to report earnings Tuesday afternoon. If Dell is any
indication, HP shareholders might anticipate more disappointment
late Tuesday.
Both HP and Dell have attempted to shift their business
strategies to avoid the secular trend, but evidently they haven't
changed quickly enough. Dell has tried to move into the
enterprise sector, shifting away from the consumer sales
business.
Meanwhile, HP has also tried to reinvent itself, naming Meg
Whitman CEO in the fall of 2011. Whitman's predecessor, Leo
Apotheker, planned to spin-off HP's PC business; Whitman
cancelled that plan.
Then there is, of course, the company at the heart of the PC
market: Microsoft itself.
In October, Microsoft released Windows 8 -- the most ambitious
redesign of its dominant operating system in at least 17 years.
Windows 8 attempts to go where no one has gone before: create an
operating system that's equally as good on a touch screen as it
being controlled with a mouse and keyboard.
With this design, Microsoft has made it clear that it realizes
the attractiveness of the mobile space. Windows 8 is still very
much a PC operating system, but Microsoft has gone out of its way
to cater to the mobile market.
Perhaps that is why Microsoft is only the stock of the group
that is up year-to-date:
- AMD: -64.26%
- Intel: -16.95%
- HP: -48.45%
- Dell: -38.48%
- Microsoft: +2.59%
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.