PC makers like Hewlett-Packard Corp. (NYSE: HPQ), Dell Inc. (NASDAQ: DELL) and Taiwan's Acer have seen computer sales decline in the past year as consumers faced a recession and tightened wallets.

Now, this isn't the first time PC sales have slumped, but it did send a red flag up a bit to those the sell the most: how about diversifying a little bit?

Shares of Hewlett-Packard (NYSE: HPQ) were last seen headed south after the world's largest technology company reported fiscal first-quarter results and cut its full-year 2009 guidance.

HP said it earned 93 cents per share, excluding one-time costs, on revenue of $28.8 billion for the quarter.

While the bottom-line number matched analyst estimates, the top-line figure fell well short of expectations by more than $3 billion.

Part of the revenue shortfall was a result of currency fluctuations, but the pullback in technology spending was broad-based, as all but one of the company's major business lines posted a decrease in revenue.

Intel Corp.'s (NASDAQ: INTC) quarterly earnings results are like a canary in a coal mine for investors. If the world's largest chipmaker beats Wall Street expectations later today, then shares of every gadget, widget and internet company will raise in sympathy. If things go awry, tech investors better run for cover.

Interestingly, Wall Street analysts are forecasting growth at the Santa Clara, Calif.-based company to slow to a crawl in the quarter but most consider the stock a buy. Revenue is expected to increase 7% in the second quarter, down from 12% in the previous three quarters, according to analysts surveyed by Bloomberg News who are calling for sales to rise 4% this year, half the rate of 2007. Analysts expect the company to earn 26 cents per share on revenue of $9.33 billion.

Earlier this year, tech research firm Gartner reduced its worldwide sales forecasts for personal computers, citing the weakening economy and cautioned that growth could drop into the single digits. But what's driving Intel these days is notebook computers, where sales remain robust. Dell Inc. (NASDAQ: DELL) reported better-than-expected results in May because of growth in laptops sales.

Dell (NASDAQ: DELL) may be back on track. Data from research firm IDC shows that, in the fourth quarter, Dell shipped 17.1 percent more PCs worldwide in the quarter than in the year-earlier period, for a total of 11.3 million units and 14.6 percent of the global PC market, according to Reuters. The company also had strong results in the U.S.

It may be that Dell's program to sell PCs through retail outlets is starting to show results, but that would not account for the global change. The company has attempted to add new models and pair that with aggressive pricing. That is driving growth, which may be coming at the expense of rival Hewlett-Packard (NYSE: HPQ).

If the IDC figures are accurate, Dell's numbers for the last quarter of 2007 should be better than expected.

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

When Dell (NASDAQ: DELL) reported Q3 numbers last week, the market was underwhelmed by the computer maker's results. Dell, in the midst of staging a comeback under founder and CEO Michael Dell, missed earnings by a penny. Although this was the first solid quarter of honest-to-goodness results after a string of quarterly "preliminary" results due to an accounting scandal, the market didn't let up. Missing estimates by even a penny can be disastrous in the short term.

Well, larger competitor Hewlett-Packard (NYSE: HPQ) continues to add to that misery, as research firm iSuppli recently stated that the Palo Alto, Calif., company increased its market share over rival Dell in the third quarter of the calendar year. Adding insult to injury, Taiwanese computer maker Acer stole the number two spot in laptop sales away from Dell in the Q3 period as well, after completing its acquisition of the Gateway brand in the same quarter.

According to iSuppli, Hewlett-Packard took home 19.2% of all computer shipments in the third quarter, widening its lead against Dell's 14.6% share. In 2006's Q3 period, the difference was 16.5% for HP compared to 16.3% for Dell. My, what one year can do. Dell, ever one to control internal costs, let that one area get out of hand in its Q3 period and that dented its profit even as revenues grew. With laptop PCs continuing to grow way faster in unit shipments than desktop PCs, and with a resurgent Acer not giving an inch, it's going to be one large, uphill battle for Dell from here on.

Reuters makes the argument that strong numbers from HP (NYSE: HPQ) will cause the market to expect more from Dell (NASDAQ: DELL). The news service says HP "results may raise the bar for competitor Dell, which is more vulnerable to U.S. economic woes and reports earnings next week." Dell does get 85% of its sales from the U.S. market.

Wall Street is not so stupid that it has missed the vulnerability in the Dell model. HP's shares are up more than 20% so far this year. Dell's are only up 5%.

Dell only needs to report very modest numbers to please investors. Its new program to sell to consumers through retail outlets is only a year old and its push into key markets like China is in the early stages.

The question investors will have for Dell management is: what does 2008 look like? If the PC company cannot begin to pick up shares from HP, Lenovo, and Acer by then, the turnaround is no turnaround. It will have turned out to be a nice try.

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

Are PC sales dead? Far from it! The personal computer's demise has been predicted in many circles for years now as applications and tools move to the internet from the computer hard drive. But then again, you have Microsoft Corp. (NASDAQ: MSFT) and Apple, Inc. (NASDAQ: AAPL) both releasing brand-new operating systems this year and trumpeting them all over the world. In Microsoft's case, it's Windows Vista and in Apple's case, it's the Leopard operating system.

The market continues to shift from powerful but bulky desktop PCs toward notebook PCs, and that trend will continue into the holiday season this year. It's scary to think that PC sales would eventually slow down after everyone has bought a notebook, but just in case that happens PC makers are shifting sales focus to markets outside the U.S., something that has been increasing in scale this year.

Let's put it this way -- out of the top consumer electronics "must have" items as measured for this holiday season by the Consumer Electronics Association, computers beat out big-screen TVs, clothes and money (among other things). As measured in the third quarter of this year, PC sales in the U.S. grew at about a 5% rate compared with a 15.5% rate across the rest of the globe.



So PCs are catching fire in many other areas outside the U.S. even as respectable single-digit growth happens here. For an old technology that just continues to apparently get better, PCs are long from dead. My guess is that the hardware is basically no more than a strong commodity, but the internet is what is driving sales of PCs. If you're not connected, then who are you? Someone in the market for a PC, that's who.

Lenovo Group Ltd. (OTC: LNVGY), the Chinese company that purchased IBM Corp.'s (NYSE: IBM) personal computer hardware division a few years ago, nearly tripled its latest quarterly profit. The higher results were due to cost cuts and increasing market share in the PC market.

Lenovo is still not a household name to many U.S. customers, although the brand is well-known in global circles and is the largest PC seller in Asia. The company is the third-largest maker of PCs behind leader Hewlett-Packard Corp. (NYSE: HPQ) and Dell, Inc. (NASDAQ: DELL). The company's net income for the Q3 period rose to $105.3 million from the year-ago $38 million, with a collection of five analysts (not really a consensus, heh) giving an average estimate of $72 million for the quarter. Lenovo blasted through that average estimate handily.

Although Lenovo is increasing its market share and is reducing employee headcount to get costs in control when it comes to labor, it faces a formidable challenge from the strength of HP, which has gained on every front from operational efficiency to labor costs to more sales in the last 24 months.

Dell (NASDAQ: DELL) will begin selling its PCs in Staples (NASDAQ: SPLS) office supply stores as of November 11, according to both companies. The PC lineup will include Dell's Inspiron 530 desktop PCs and two versions of Inspiron notebooks, as well as supplemental Dell products like all-in-one printers and flat-panel LCD monitors.

Will this help Dell have a strong holiday sales push? Possibly, but it's doubtful.

Dell's deal with Wal-Mart (NYSE: WMT) was grand when it was announced, but since the company has given no specific performance figures on how well its retail effort in Wal-Mart has fared, it's hard to gauge how customers will react to Dell's brand in Staples. Does Staples even sell many PCs?

Dell systems in Wal-Mart stores reflected an aura of older or overstocked parts assembled into PCs and dumped into Wal-Mart's parking lot, rather than any specific computer build made for the retailer, and I'm not so sure customers have responded in droves to buy Dells inside those local Wal-Mart stores. Not enough time has gone by, though, so I could be jumping the gun here.

Dell's latest partnership will put its PCs and products into 1,400 more retail locations, which will instantly give it more exposure to the American buying public. Perhaps that is what Dell is going after here -- mass exposure (which brings a certain amount of purchases) instead of strategic, slower partnerships. Dell is expected to strike more retail agreements in the next 12 to 18 months, but not without challenges, according to Robert W. Baird analyst Daniel Renouard. Dell is now significantly behind competitor Hewlett-Packard (NYSE: HPQ) in overall computer system sales, and these retail efforts are considered by many to be a desperate attempt to win back market share. Right now, it's too early to attribute any success or failure in that effort.

Well it's harvest season here in New England, and the Macintoshes are ripe. But in Silicon Valley, it looks like Apple (NYSE: AAPL)'s Macintosh brand is the fruit filling in the PC market pie. According to TheStreet.com, Apple's Macintosh is gaining market share.

How much? In the third quarter, Apple's Mac computers accounted for 6.3% of all PCs sold, up from 5.7% a year earlier, according to IDC. This growth means that Apple pulled further ahead of its competitors as it increased its lead as the third-ranked player in the market, a position it took over earlier in the year.

This gain in market share should help Apple when it reports on Monday, as the Macintosh has been accounting for a greater share of Apple's own profit pie. In the first nine months of the company's fiscal year, the Mac accounted for 41% of the company's total revenue, up from 36% during the same time last year.

It's a tasty time to own Apple shares. The question for investors is whether Apple -- trading at a Price/Earnings to Growth (PEG) ratio of 2.6 (on a P/E of 49 and earnings growth forecast of 19% to $4.48 in 2008) -- is ripe for harvest or hot to hold. What do you think?

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Apple.

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As the seasons roll around so do the quarterly PC sales numbers from research firm Gartner. It will be a chilly fall for Dell (NASDAQ: DELL) In the third quarter, the Texas-based PC company shipped 9.8 million PCs. That was an increase of less than 4% over the same period last year, and gave the company 14% of the global market, according to The Wall Street Journal.

By way of contrast, Hewlett-Packard (NYSE:HPQ) shipped 12.8 million PCs world-wide, enough for 19% of the market and a 33% increase from the year earlier period.

Ouch.

It would appear that HP is going to report especially strong PC sales when it releases its third quarter earnings. Its shares are already at almost $53, near their 52-week high.

But the numbers raise serious questions about Michael Dell's chances of turning around the company that he founded. He has put his PC into retail outlets, which should help sales over time. But he is still competing with smaller companies like Acer and Lenovo, who are anxious to increase sales in Europe and the US.

Dell's shares are up almost 15% over the last six months. But if the Q3 sales numbers are reflected in its earnings, the improvement could be short lived.

Douglas A. McIntyre is an editor at 24/7 Wall St.

When it comes to predicting various product sales from hipper-than-hip Apple (NASDAQ: AAPL), it's good to know that we have more than financial analyst statistics and feelings to look at. One stock watcher recently hung out quite a bit at several Apple retail stores to try and collect empirical data from his own two eyes to see if Apple's analyst-predicted iPhone and Mac product sales numbers are indeed stacking up or are falling short.

The conclusion? Apple will most likely achieve its goal of 730,000 iPhone sales in the quarter ended September 30. In fact, the conclusion this analyst came up with from his store checks indicate Apple could bypass its own estimate and sell over 800,000 iPhones in the July-September quarter.

As far as Apple Mac sales go, Gene Munster's research stated that about 2 million Mac systems would be sold in September alone, pushing past his earlier estimate of 1.9 million. It's interesting to note that the average Apple retail store sells over 55 Mac systems per open day, not counting website sales or other retail sales, like those inside Best Buy (NYSE: BBY) locations. Are Apple shares headed above $200 territory? Munster maintains his $211 target.

Analysis provided by Theflyonthewall.com:

Dell Inc. (NASDAQ:DELL) Q3 revenue was essentially in-line with expectations, but margins improved nicely, with gross margins jumping to 17% from 15.5%. Dell's shares surged on the report, up $2.33 Wednesday to $27.16 in very heavy trading.

Growth for Dell is coming from where it was supposed to originate from the Asia Pacific-Japan region. Dell reported 23% unit volume growth in the Asian region in addition to solid unit volume growth of 9% in Europe.

However, sales in the Americas were flat to down, which has been the case for a while. The high- growth days in the mature economies are over, especially from a revenue perspective.

There might be a good trade in Dell based on margin expansion, but investors should look at newer, high-growth companies, such as Google Inc. (NASDAQ:GOOG) and Interactive Corp. (IDC). It's important for traders and investors to remember that we are in the Internet era, not the PC era.