March PC Shipments Exceed Forecasts, Bode Well For Advanced Micro Devices And Intel

The PC market may be taking its baby steps toward turning things around, going by a research published by Bluefin Research Partners on Monday. Given the semblance of stability in the PC environment, the firm said it likes Intel Corporation (NASDAQ: INTC) and Advanced Micro Devices, Inc. (NASDAQ: AMD) at these levels.

The firm also said it maintains its positive view on Western Digital Corp (NASDAQ: WDC) and Seagate Technology PLC (NASDAQ: STX), with its preference tilted toward the former, thanks to continued NAND tightness and relatively healthy pricing practices.

Above-Forecast March PC Shipments

Analysts John Donovan and Paul Peterson noted that PC shipments came in at 25.3 million in March, slightly ahead of Bluefin's estimate of 25.3 million, translating to a quarterly run rate of 65.3 million. The quarterly run rate of 65.1 million was also above Bluefin's estimate of 64 million to 65 million. The latest polling by Bluefin revealed that channel inventories remain relatively lean, thanks to the relatively predictable PC shipment cadence.

Bluefin raised its unit shipment forecast for 2017 moderately to 266 million–269 million, down only 1–2 percent from 2016 levels. The firm did not rule out the possibility of upside arising out of year-end corporate upgrades. The firm's research revealed that PC supplier eye shipments of 20 million to 20.5 million for April.

Bluefin's forecast for 2017, quarter-wise is as follows:

• Q1: 65.1 million.
• Q2: 64 million–65 million.
• Q3: 66.5 million–67.5 million.
• Q4: 70.5 million–71.5 million.

Product-Wise Breakup

Bluefin noted increasing demand for thin ultraportables, with these MacBook-like models offering compelling features, including extended battery life, HD or 4K screen resolution, touchscreen options, etc., in an ultra-thin form factor.

The firm also sees increased competition in the mainstream market propelling demand, given the mid-April availability of 4 new AMD Ryzen 5 SKU, priced between $169 and $249.

On Intel

Bluefin said it likes the Intel story, as the company's 2017 guidance incorporated conservative PC shipment estimate than PC OEMs' forecast. The firm expects IoT and memory growth to be strong, although seeing hurdle from reduced data center growth expectations.

On AMD

Bluefin sees AMD as a share gain story, as it has new CPU and GPU architectures, with a leading-edge process. The company is expected to gain share in PC, graphics and server, the firm added.

On Western Digital

The firm sees ample opportunity for the company going forward. According to the firm, the continued NAND tightness would prop up prices, giving the company an impressive EPS momentum. The firm also referred to SanDisk cost savings as a tailwind.

"We think WDC is in perfect position to make a deal for the Toshiba Memory unit given Toshiba and the Japanese government's lack of desire to sell to a Chinese entity and the familiarity with WDC," the firm noted.

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