Is PC/Windows Weakness Trend Worse for Intel or for AMD?

IDC said:

PC industry efforts to offer touch capabilities and ultraslim systems have been hampered by traditional barriers of price and component supply, as well as a weak reception for Windows 8. The PC industry is struggling to identify innovations that differentiate PCs from other products and inspire consumers to buy, and instead is meeting significant resistance to changes perceived as cumbersome or costly.

Stern Agee addressed the processor question. Its Vijay Rakesh said:

We had noted that Intel could see weakness as H-P prunes some of its PC Portfolio. We believe some of the Overall PC Adjustments could continue into the June quarter and could see overall notebooks flat to down 2% to 5% quarter over quarter. In Fiscal 2012, H-P was an 18% customer for Intel and a greater than 10% customer for AMD.

This is awful news for both processor companies as neither is making the headway in smartphones and tablets that the companies need to make. It seems that, with things already very bad at AMD, marginally it may be having a bigger impact on Intel ahead, when you consider the news about AMD winning the new Xbox and PS4 video game systems. Cheaper PCs also may be more affordable with AMD over Intel inside, although that remains up for debate.

Rakesh maintained a Neutral rating on Intel with an $18 price target. He lowered his Intel estimates as follows:

• 2013 from prior $54.6 billion in sales and $1.94 in earnings per share down to $53.3 billion in sales and $1.90 in earnings per share
• 2014 from prior $56.8 billion in sales and $2.15 in earnings per share down to $55.6 billion in sales and $2.10 in earnings per share

Intel shares are down 2.25% at $21.76, and AMD shares are down 2.9% at $2.53, so far after the notes. Microsoft shares are down 4.9% at $28.80 so far on the day. If Apple really is going to be a winner here, it is not showing up handily in the stock. Apple shares are up only 0.2% at $436.65.