Demand Softens And High Inventory Causes PC Sales To Plunge

New data from International Data Corp. shows that global shipments of personal computers dipped 29% in the first quarter of this year as a result of weak demand, excess inventory, and a weakening macroeconomic environment.

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A drop of 56.9 million units was recorded in overall shipments for the quarter. The shipments in the first quarter of 2019 were 59.2 million units, and the shipments in the first quarter of 2018 were 60.6 million units; both are below the pandemic surge, as well as the pre-pandemic period: in the first quarter of 2019, the shipments were 59.2 million units.

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In the report, IDC said that inventory levels in the sales channels remain higher than normal, and the elevated inventory levels are likely to persist and even increase in the second half of the year and possibly even into the third quarter.

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Across all major PC makers, IDC's data indicates substantial year-over-year declines in the first quarter. With 12.7 million units, Lenovo 992 –0.35% maintained its market share leadership, but it was down by 30.3% from a year ago. In comparison, Dell Technologies DELL +2.15% (DELL) saw unit sales decrease 31% to 9.5 million, while HP HPQ +1.37% (ticker: HPQ) sold 12 million units. Just 4.1 million Macs were shipped by Apple AAPL –1.92% (AAPL) in the fourth quarter, down 40.5% from the previous quarter. The top five were rounded out by Taiwanese PC maker ASUS 2357 +0.37% who produced 3.9 million units, a decline of 30.3% over the previous year.

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According to HP's financial results for its fiscal fourth quarter ended in January, the company saw a 24% decline in revenues as well as a 24% decline in unit sales, both of which were negatively affected by the company's decline in revenue. At the time, HP's executive chairman, Enrique Lores, said he expects full-year PC unit sales to be down in the high teens for the industry as a whole. During the same period, the company's client-systems group, which includes its PC business, experienced a 23% decline in revenue. For the company's April quarter, Dell's company had projected that the group's revenue would decline by mid-teens for the period.

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There is something a little more surprising about the Apple figure that comes from IDC. CEO Luca Maestri, in his presentation of the company's December quarter results, indicated that it was expecting a double-digit decline in revenue for both Macs and iPads in the March quarter, but Street consensus estimates place the unit count far higher than the IDC estimate at 6 million. As for revenue expectations for the quarter, the street estimates $8.2 billion in Mac sales for the quarter, which is down 21% from the same quarter a year ago. It should be noted that Apple does not actually report the number of Macs or other products that it sells.

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In response to the IDC data, Apple declined to comment.

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The stock price of Apple is down 2.6% in Monday morning trading, at $160.31, while the stock price of HP is up 0.8% at $29.52, and the stock price of Dell is down 1.8% at $40.94.

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