Technology is the only sector in the Standard & Poor’s 500 index that has declined over the last 12 months. It’s down 3 percent compared with the 13 percent rise of the broader market.
So what’s going on?
The shift of consumer spending from personal computers toward tablets and smartphones poses an ongoing challenge for some of the industry’s biggest companies. Two market research firms reported unprecedented declines in sales of desktop and laptop computers in the first three months of this year. IDC says PC shipments fell 14 percent worldwide from a year earlier. Gartner pegged the decline at 11 percent.
IDC blamed the release of Microsoft’s new operating system, Windows 8, for accelerating the sales decline. Too many customers were confused by the new software and put off by the significantly higher cost of Windows 8 machines.
Even so, Microsoft reported earnings last week that beat financial analysts’ expectations. The stock is down 5 percent in the last 12 months.
Hewlett-Packard, the world’s largest PC maker, and Intel, whose chips are in 80 percent of the world’s PCs, are trying to extend into mobile computing. Both stocks are down more than 17 percent over the last year.
Their troubles are balanced by companies, such as Google and Qualcomm, that are benefiting from the shift to mobile devices.
Tech companies are expected to report a first-quarter earnings decline of 1.4 percent compared with the first quarter of 2012.Associated Press