PC makers in for profit misses in 2023 as demand slows

Yahoo Finance Live anchors discuss the expectations for PC companies in 2023 as sales declines continue.

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JULIE HYMAN: The holiday quarter showed a sharp drop in global shipments of personal computers. That's according to new research from the International Data Group. Every manufacturer, with the exception of Apple, saw double digit declines, and that data is where we find Sozzi's take today. Sozz.

BRIAN SOZZI: Otherwise known as IDC coming at us with some very depressing data. Fourth quarter unit shipments for PCs or for the industry down 20% year over year, really a horrible plunge for an industry that came under pressure a lot starting last year, as people just stopped buying PCs because they need them. They bought new ones during the COVID-19 pandemic.

So that 28% decline was worse than Citi's estimate for a 22% year over year decline, also worse than the 16% year over year declines in each of these second quarter of last year and third quarter of last year. So another way to look at that is the declines are just getting worse and not good for major PC makers.

Now there were a couple of bright spots amidst this absolutely depressing data. Apple gained market share, as well as ASUS. So Apple and ASUS were winners in a challenging fourth quarter, market share gainers there. Market share losers, according to IDC, Lenovo, HP, Inc, and Dell, Dell losing almost one point, one percentage point of market share. Very interesting there as well. They were a big market share loser in the fourth quarter.

Now, going back to Citi, what they're saying here, and I think what you need to be mindful as we start to get earnings from Dell and HP and over the next month, they're saying consumer demand remains soft because of the-- as I just mentioned, the COVID purchasing the year before. So that is a problem. Also that the outlooks may be tempered when a lot of these companies report.

So you could get the fact that we get weak quarters from both of these makers, but also weak guidance because the first half can be very challenging. Citi noting perhaps you get a pick-up in commercial and in consumer PCs in the second half of this year. But again, that remains wildly uncertain.

Fire my take here, guys. My take is this. As I just mentioned, here comes the PC profit misses. HP, very well run company. Dell has been cutting a lot of expenses, but still, if that top line is under pressure, it's going to be hard to make some of the, I would still argue, some of the aggressive earnings estimates out there for the PC sector.

BRAD SMITH: Yeah, it's a question of on the corporate side, how many of those corporate partners in the B2B part of their businesses and selling through some of that PC are still buyers on a reduced headcount environment. And then additionally, on the gaming front, if gamers are saying, you know what? I need to swap out my PC, instead of just saying, yeah, I just want to get that new graphics card chip.

BRIAN SOZZI: Yeah, look, basic analysis here. If you're a Coinbase, we had Coinbase news yesterday they laid off another 20% of their workforce. That's 20% of the workforce that no longer works at Coinbase. And they don't need new computers.

BRAD SMITH: Yeah, well--

BRIAN SOZZI: We break it down as we do here.

JULIE HYMAN: That's pretty straightforward.

BRIAN SOZZI: That's what we do here.

BRAD SMITH: Absolutely. Well, we'll keep close tabs on all of those companies and their ticker symbols and more.