Advanced Micro Devices Inc (AMD)

[KeithDust2000]

Analysts: PC demand flagging in Q4

By Rex Crum, CBS.MarketWatch.com

SAN FRANCISCO (CBS.MW) - Weak demand for personal computers among consumers will likely lead to lower-than-expected PC sales during the always-important holiday shopping season, two analysts said Tuesday.
Bear Stearns analyst Andrew Neff lowered his estimate for fourth-quarter worldwide PC shipments slightly to 51.3 million from 51.5 million units. Neff's new forecast estimates that PC shipments will grow 13 percent from a year ago, down from his prior estimate of 14 percent growth.

Neff said in a research note that the forecasts reflects "lower desktop shipments from weaker consumer (demand)," caused in part by increased demand in notebook PCs. Neff added that higher oil prices, are contributing to weakness in the consumer sector, a trend suggested by recent comments on the consumer market from Intel (INTC: news, chart, profile) and Microsoft. (MSFT: news, chart, profile)

Meanwhile, Steven Milunovich of Merrill Lynch said recent retail checks suggest inventory levels are increasing ahead of anticipated holiday sales and that "demand seems mediocre" for now.

Milunovich also said that the battle for retail shelf space remains torrid. According to Milunovich, Hewlett-Packard (HPQ: news, chart, profile) and Compaq desktop brands have regained some retail presence, and currently hold about 48 percent of retail desktop shelf space.

However, Milunovich said that Gateway (GTW: news, chart, profile) and its eMachines line have taken about 10 percentage points away from H-P and Compaq since April, when Gateway embarked on a new retail initiative.

"(Store) managers have said that both are trusted brands-H-P on the high end, and eMachines on the low end-and expect them to have the largest inventory during the holiday shopping season," Milunovich said in a research note.

PC stocks climbed with the overall tech market. H-P rose 43 cents to $19.91, Dell (DELL: news, chart, profile) added 80 cents to reach $35.85, Gateway edged up by a penny to $5.81 and Apple Computer (AAPL: news, chart, profile) rose 57 cents to $53.02.

http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...

Now that just sucks bad if correct.