A downgrade of Lenovo bodes ill for HP and Dell

Posted Jul 22nd 2008 11:37AM by Douglas McIntyre
Filed under: Analyst Upgrades and Downgrades, Forecasts, Bad News, Apple Inc (AAPL), Dell (DELL), Hewlett-Packard (HPQ), China

JP Morgan downgraded big China-based PC maker Lenovo. According to Reuters, the brokerage cut Lenovo "to neutral from overweight due to a near-term slowdown in revenue growth from weak China demand and a slower ramp-up of the U.S. consumer business."

That is not exactly good news for U.S. PC companies Dell (NASDAQ: DELL) and Hewlett-Packard (NYSE: HPQ) that already appear to be losing market share to the Apple (NASDAQ: AAPL) Mac. China is a critical market to both companies, and any sign of further stress in the U.S. market does not leave them many regions to make up for faltering demand.

Wall Street is already concerned that a recession in the U.S. and slowing economies abroad will hammer the PC market. Like most American companies, HP and Dell thought they could always rely on the rapidly expanding markets in Asia.

It turns out that the best laid plans are not working out.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: DELL, HPQ, Lenovo