PC 2Q sales weak, raising doubts about earnings

Jul 14, 2011 By JORDAN ROBERTSON , AP Technology Writer

(AP) -- The personal computer market grew slower than expected in the second quarter, hurt by the rise of tablet computers and anemic consumer demand in the U.S. and Europe.

The tepid diagnosis of the PC industry's health in two reports released Wednesday offers another sign of trouble for an industry at a crossroad. The reports' findings threaten to weaken investor sentiment about the sector heading into earnings season, with Apple Inc. and computer chip makers Intel Corp. and Inc. scheduled to report next week.

Market research firms . and IDC, using different methodologies, each found that PC shipments improved in the second quarter but were still lighter than expected.

Gartner found that 85.2 million PCs shipped, a gain of 2.3 percent but below its 6.7 percent projection. IDC found that 84.4 million PCs shipped, a 2.6 percent gain and short of its 2.9 percent projection.

IDC blamed the shortfall on a "hangover" from strong growth in the first half of 2010 as well as economic worries and competition from smartphones, tablets and other new technologies. Gartner said the PC market is adapting to the new pressures.

"After strong growth in shipments of consumer PCs for four years, driven by strong demand for mini-notebooks and low-priced consumer notebooks, the market is shifting to modest, but steady growth," Mikako Kitagawa, a Gartner analyst, said in a statement. "The slow overall growth indicates that the PC market is still in a period of adjustment, which began in the second half of 2010."

Hewlett-Packard Co. retained its position as the world's No. 1 PC seller in both companies' research. It was followed by . and .

Strong sales in Asia and Latin America and to corporations helped buoy the industry despite a contraction in the U.S. market.

Apple, which makes Mac computers as well as iPhones and , was the strongest performer in the U.S., rising above 10 percent market share in both reports.

HP shares were unchanged at $35.44 in extended trading, after the reports were released. Dell shares fell 7 cents to $16.46. Intel slipped 8 cents to $22.40, while AMD dipped 3 cents to $6.45. Apple shares fell $1.40 to $356.62.

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