Even Apple Feels the Pinch From Declining Laptop Sales
The tides are shifting as consumers continue to move away from laptop and desktop computers. For the first time since the global market slump started in 2014, Apple (AAPL) - Get Reportshipped between 4% and 8% fewer Macs during the second quarter, according to data compiled by Gartner and IDC.
Gartner's latest report showed PC shipments fell 4.5% year over year to 62.4 million units during the second quarter. While the decline is disheartening, analysts were expecting the market to contract by 7.4%.
Meanwhile, Apple shipped 4.4 million units, making it the world's fifth-largest PC vendor, according to IDC. The company's market share fell to 7.1% from 7.4% in second-quarter 2015, according to IDC, while Gartner estimated Apple's market share remained unchanged at 7.1% even as its global shipments fell by 4.9% year over year.
Gartner has Apple ranked as the fourth-most-popular PC maker behind market leader Dell, HP (HPQ) - Get Report and Lenovo.
"One of the ongoing problems in the PC market has been the price hike in selected regions due to the weakening local currency against the U.S. dollar," said Gartner principal analyst Mikako Kitagawa. "The price issue has impacted the EMEA and Latin America regions for the past year. However, PC shipment declines became rather modest in the second quarter compared with previous quarters, which suggests a fading currency impact."
IDC attributed the better-than-expected results on improvement in channel inventories as well as easier year-on-year comparisons and an easing of component supply. However, the firm warned that those types of supply-side tailwinds don't necessarily reflect a change in consumer purchasing habits.
"The PC market continues to struggle as we wait for replacements to accelerate, along with some return of spending from phones, tablets and other IT," said Loren Loverde, vice president of Worldwide PC Trackers & Forecasting. "Our long-term outlook remains cautious. However, the strong results in the U.S. offer a glimpse of what the market could look like with pockets of growth and a stronger overall environment. It's not dramatic growth, but it could push the market into positive territory slightly ahead of our forecast for 2018."
Analysts at Action Alerts PLUS have noted the industry headwinds that Apple is facing heading into its earnings release later this month, including decelerating iPhone sales.
"To quote from our May 16 note, we fully expect weak results to spill into Apple's next quarterly results (fiscal third quarter, ending in June) and would not be surprised to see another wave of analyst downgrades and/or estimate reductions in the meantime," portfolio co-managers Jim Cramer and Jack Mohr wrote. "Anyone invested in the stock for hope of outperformance between now and its late-July earnings release should only do so with full understanding of the risk and downside potential."
Apple is a holding in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.
Apple's summer of discontent continues with today's disappointing PC sales news, but the market won't be able to fully assess the damage until the company releases its quarterly results on July 26.
Editor's Note: This article was originally published at 5:18 p.m. EDT on Real Money on July 12.