Enis’s Macro Wrap – The End of the PC

by Enis October 1, 2012 7:57 am • Commentary

In the midst of one of the largest 3 year stock rallies in market history, we have witnessed a groundbreaking shift within the technology industry.  AAPL has eaten the lunch of the many players of the PC industry, kicking them off the tech playing field one-by-one.  Last week saw more estimates of PC demand for the industry revised lower, indicating negative growth this year and next.  One look at AAPL’s chart gives you a sense for how the winner has done.  The losers have been getting kicked especially hard in the past 6 months.

DELL and HPQ both hit new lows last week.  The interesting backstory for both companies is that they actually have a relatively well diversified revenue base, not very reliant on pure consumer PC sales.  Despite that diversification, the broader trends moving away from the Personal Computer, in both business and the home, have caught up with them.  Here are the 2 charts:





Easy to say in retrospect, but who was buying these stocks in February?  Clearly, they had some hopes of a turnaround in the PC market onslaught that was badly misplaced.  However, the one dominant player throughout the growth of the PC market during the 1990’s and 2000’s, among the numerous hardware providers who came and went, was MSFT.  Interestingly, despite their well-documented missteps over the years, the stock is near 4 year highs, and still up on the year:



The big question over the next few years is whether the tablet market will follow the example of the PC market, with periodic winners overtaken by upstarts every few years, or whether AAPL will remain the main show in town.

Markets overnight:

  • China is closed this week for the Golden Week holiday.  Asian markets were mixed as manufacturing data in China and Australia was weak again.
  • Europe rallied right after the open, now trading up 1%, on what seemed like start-of-the-month buying.  The strong rally took SPX futures from an overnight low of 1428 up to 1441 at the highs.  Now indicated up 0.4%.
  • The dollar is essentially flat vs. most crosses, commodities are mostly lower, and Treasury bonds are mostly higher, so markets not behaving in classic risk-on fashion
  • Very heavy week of economic data, with ISM manufacturing today, ISM Non-Manufacturing on Wednesday, and Payrolls on Friday