Updated from March 20Notebook computer sales, the bright spot in a challenging PC market, will grow significantly less than expected in the current quarter, according to a new Wall Street report. And the transition to Microsoft's ( MSFT) forthcoming Vista operating system will stall new desktop purchases throughout the year before sparking an upgrade cycle in 2007. As a result, Lehman Brothers analyst Harry Blount trimmed his forecast of PC unit shipment growth in 2006 to 9.8% vs. his earlier expectation of 12.4% growth. The report is the
The firm cited tough year-over-year comparisons, as well as the relatively young notebook-installed base. Lehman slightly trimmed its revenue projections for Dell ( DELL) and Hewlett-Packard ( HPQ), the top two PC vendors, as a result of the new market outlook. Lehman Brothers trades regularly in shares of Dell and H-P and has provided non-investment banking services to Dell and investment banking services to H-P in the past 12 months. Although Lehman Brothers said that the Vista operating system may lead to a pause in PC purchases this year, it expects the new operating system to rejuvenate desktop sales in 2007, boosting shipments 6.3%, compared to a previous estimate of 0.3% desktop growth. The firm also noted that PC sales outside the U.S. accounted for a greater share of overall sales in the fourth quarter of 2005 than in the past.