So much for the turnaround at Dell (DELL) and the two-year revival at Hewlett-Packard (HPQ). Even overseas PC companies like Lenovo are being hurt by the perception that US demand for computers is falling.
Lenovo shares "dived more than 14 percent on Wednesday after a broker cut the Chinese firm to sell on growing fears of a U.S. recession," according to Reuters. Since Lenovo sells most of its computers in Asia, the drop in the company’s stock would have to assume a near disaster in the US.
Dell is already back to a 52-week low and HP shares have sold well off their multi-year highs. AMD (AMD) and Intel (INTC) have also been beaten like mules. If the trend continues, Apple (AAPL) could be hurt because of the importance of Mac sales to its fortunes. Microsoft (MSFT) could be vulnerable because of the amount of its revenue that is expected to come from Vista, the new PC OS.
Processors built two years ago are still very fast given the applications needed to be run by most consumers and businesses, That means that the upgrade cycle could go out another several quarters. Vista is not popular enough to pull up computer sales on its own. Buying a PC with a chip that will run a super-computer may have lost its appeal.
Older software and chips may just be so good that pinched consumers and enterprises can pass on the new stuff, at least for now.
Douglas A. McIntyre
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