International Data Corporation is one of the most highly regarded market research firms in the country. With its eye trained specifically toward tech, IDC knows technology pretty intricately. And IDC, upon connecting a few dots and crunching some numbers, does not see good times ahead for the PC market.
In fact, IDC expects PC shipments to fall about 50% faster in 2015 than they did in 2014.
The 30-year rise of personal computers gave way to a bevy of multibillion-dollar companies whose businesses centered around the ubiquitous machines. But with the rise of mobile phones and tablets, it looks like the PC market is done growing for good.
If you’re scanning your portfolio for stocks to sell and run across one of these three stocks, look no further: each one relies heavily on the waning PC market, the world-changing technology of yesteryear.
Stocks to Sell for PC Sales Slump: Intel Corporation (INTC)
YTD Stock Price Performance: -15%
Intel Corporation (NASDAQ:INTC) leads the pack of big-name blue-chip stocks to sell, and for a fairly straightforward reason. The chip-maker revealed to Mr. Market that it expects revenue to take nearly a $1 billion hit in the first quarter of 2015, driven largely by softer PC demand.
Intel’s processors are found in about 85% of PCs, with Advanced Micro Devices, Inc. (NYSE:AMD) being the only other chip-maker holding meaningful market share. That’s some heavy exposure to a market in what looks to be a perpetual decline.
INTC can add its name to the long list of U.S. stocks with international exposure that are feeling the pain as the dollar strengthens against other currencies. Although all of Intel’s sales are in dollars, it sells to PC makers across the globe, requiring those customers to convert their currency to greenbacks if they want the goods. In turn, that’s causing PC prices to rise overseas as computer-makers pass on costs to the consumer, ultimately threatening to stifle demand.
Basically, it’s not a pretty picture for INTC stock moving forward; I wouldn’t touch this one with a 10-foot pole.
Stocks to Sell for PC Sales Slump: Hewlett-Packard Company (HPQ)
YTD Stock Price Performance: -20%
PC-maker Hewlett-Packard Company (NYSE:HPQ) is a clear loser as personal computers fade in popularity. HP controls a 18.8% share of the global PC market, second only to Lenovo Group Limited (ADR) (OTCMKTS:LNVGY).
Although HP is one of the bigger players in a secularly declining market, you can’t say the company doesn’t know its weaknesses. Earlier this month, HP agreed to snap up Aruba Networks, Inc. (NASDAQ:ARUN) for $2.7 billion in a move aimed at gaining exposure to the rise of mobile.
But merely acquiring Aruba Networks (in a deal that hasn’t fully gone through, no less) isn’t enough to insulate HP from what’s happening today. First-quarter revenues came in below consensus estimates, and HP also guided for a disappointing second-quarter.
If you hold rather than sell HPQ stock, at least you’ll have a chance to shed the PC and printer business, keeping only the more attractive business-facing division, dubbed Hewlett-Packard Enterprise. If you haven’t heard, HP is splitting itself up in order to reduce bureaucratic inefficiencies and increase focus.
But why hold on to a stumbling, inefficient company when you can just sell the stock and buy another one?
Stocks to Sell for PC Sales Slump: Microsoft Corporation (MSFT)
YTD Stock Price Performance: -11%
Last but not least, expect the iconic Microsoft Corporation (NASDAQ:MSFT) to take a hit in the coming years as the shift away from PCs continues. Sure MSFT is trying to gain a grip in the mobile market, but it remains elusive. Windows Phone, the company’s mobile operating system, had a pitiful 2.8% of the market in the fourth quarter, down from 3% share the year before.
Even if the market for personal computers wasn’t drying up, Microsoft’s Windows, for the first time in years, faces stout competition from a competitor other than Apple Inc. (NASDAQ:AAPL). Google Inc (NASDAQ:GOOG,NASDAQ:GOOGL) is gunning after MSFT with Chrome OS, the search company’s operating system that comes on all its heavily promoted Chromebooks.
With Google Drive and Google Docs offering widely used options designed at competing with Microsoft Office, MSFT may be forced to lower the price of Office in the long-run as consumers opt for the free, cloud-based Google services.
Microsoft won’t be going under anytime soon, but it’s not a stock I’d buy as PC sales continue falling.
As of this writing John Divine was long shares of AAPL, GOOG and GOOGL. You can follow him on Twitter at @divinebizkid or email him at email@example.com.