Third-party research data on calendar first quarter personal computing sales has started to pour in. Depending on who is asked, IDC or Gartner, PC shipments have increased by an impressive 32% to 55% in the March period.
Apple stock could benefit from what I believe will likely be outstanding Mac segment revenue growth that might reach 50% in fiscal second quarter, if not more.
Industry-wide themes in PC
At the personal computer industry level, the first three months of 2021 have benefitted primarily from dismal sales in the comparable 2020 quarter. Keep in mind that January through March of last year marked the initial stages of the COVID-19 crisis, and PC sales fell off a cliff at first.
It is against a lowered bar that first quarter 2021 PC shipments have likely dazzled. To be fair, however, easy comps do not fully explain why recent sales have impressed. IDC’s research manager elaborates:
“Unfulfilled demand from the past year has carried forward into the first quarter and additional demand brought on by the pandemic has also continued to drive volume. [In addition, although not reflected in unit shipment numbers], the market continues to struggle with setbacks including component shortages and logistics issues, each of which has contributed to an increase in average selling prices.”
From the preliminary data provided by the research companies, here is what else we know about computer sales in Q1:
- Lenovo continues to lead the industry, with 24% to 25% of market share, followed closely by Windows-based peers HP and Dell;
- Despite holding the number 3 position in the market, Dell may have been the relative loser in first quarter device shipments;
- Apple remains a distant fourth-place player in the PC arena, although its market share seems to have increased by at least one percentage point to 8%.
How Apple stock could benefit
The Mac accounted for only 10% of Apple’s fiscal 2020 total revenues, and an even lower 8% during the more normalized 2019 period. Therefore, it is fair to say that PC sales probably do not carry as much weight in determining Apple stock price as does the iPhone, for example.
However, the Mac may have performed extraordinarily well this time. In revenue growth terms, I believe that fiscal second period will likely be the best quarter for the segment in the past decade, at the very least. See graph below.
Should Mac growth reach my projection above, for example, I estimate that the segment alone could be responsible for about 6 percentage points of top-line increase to the entire company’s sales. This is the type of performance that might catch investors’ attention, and maybe nudge Apple shares higher.
The iPhone is the largest of Apple’s segments, but it is often not the one to produce the most revenue growth in the company’s product and service portfolio. I asked Twitter for an opinion: which other major segment will see revenues rise the most in fiscal second quarter?
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