The Zacks Analyst Blog Highlights: Hewlett-Packard, Dell, Apple, GameStop Corporation and Amazon.com

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Jul 15, 2011, 10:16 ET

CHICAGO, July 15, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Hewlett-Packard (NYSE: HPQ), Dell (Nasdaq: DELL), Apple (Nasdaq: AAPL), GameStop Corporation (NYSE: GME) and Amazon.com Inc. (Nasdaq: AMZN).

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Here are highlights from Thursday's Analyst Blog:

2Q Witnessed Slow PC Sales Growth

Recent data published by market research firms Gartner and IDC suggest that the personal computer market grew slower than expected in the second quarter, given the growing popularity of tablet computers.

Moreover, lack of consumer demand in the U.S. and Europe also affected sales to a considerable extent.

Though the two market research firms used different methodologies to track the growth, both concluded that PC shipments improved in the second quarter but were still below expectations.

Gartner revealed that 85.2 million PCs were shipped, a gain of 2.3% from the prior quarter but below its 6.7% projection level. IDC, on the other hand, reported PC shipments of 84.4 million, a 2.6% gain, below its projection of 2.9 %.

IDC said that overall shipments rose 2.6% in the quarter, but was slightly lower than their most recent projection of 2.9% growth. PC shipments in the U.S were also down 4.2%.

As per the report published by IDC, the growth in the first half of 2011 was impacted to a considerable extent by the economic worries and competition from smartphones, tablets and other new technologies. Gartner, however, said that the PC market is adapting to the new pressures.

According to IDC, Hewlett-Packard (NYSE: HPQ) remained the No. 1 vendor with 18.1% market share followed by Dell (Nasdaq: DELL) with 12.9%, while Lenovo overtook Acer for the #3 position with 12.2%. At #5 was Asus, which overtook Toshiba.

Lenovo posted the biggest gain among the top vendors, as it witnessed year-over-year shipment growth of 23%. H-P posted 3% growth, while Dell grew 2.8%. Meanwhile, Acer saw shipments fall off 10.1%.

IDC is of the opinion that PC makers continue to leverage their strength in China, although they were able to cumulate some share in the U.S., particularly in the consumer segment.

The report published by Gartner, further suggests that Lenovo is the fastest growing player in the global PC market, growing 22.5% versus the year-ago quarter, while Acer's shipments shrank 20.4%.

In the U.S. market, Apple (Nasdaq: AAPL) surpassed Acer, and is now ranked third with 10.7% market share having grown 8.5%. Acer's U.S. sales were down 22.6% from a year ago.

IDC said the United States market was weak in general, with shipments declining 4.2%. The biggest reason was a drop in netbook shipments, which sold strongly before the advent of tablets. However, strong upside in PC shipments to Asia, Latin America and Japan offset these declines.

As far as the United States is concerned, Hewlett-Packard led with 4.5 million computers shipped, down 1.2%. Dell followed with 3.8 million, down 9.8%. Apple rose from fifth to the third position, with 1.8 million, up 8.5%, based on strong sales of its Mac and MacBook computers. It also overtook Acer and Toshiba.

GameStop Incorporates Impulse

GameStop Corporation (NYSE: GME), the video game and entertainment software retailer, recently completed the incorporation of GameStop Impulse on its website.

GameStop Impulse, the digital distribution platform, segregated its offerings into three components: Impulse Client, Impulse Reactor and Impulse Publisher.

Impulse Client offers a vast digital distribution platform, thereby facilitating users to access their preferred games instantly with an option of downloading the same through their web-enabled devices.

Impulse Reactor provides content publishers with copy protection tools, along with user friendly digital rights management.

Moreover, Impulse Publisher renders effective instantaneous reporting and management gears, thus facilitating the publishers to administer their game.

The recent technological advancements have made the industry highly aggressive as buyers now have multiple options to obtain video game accessories and softwares for gaming systems and computers.

The gaming industry is experiencing a transition, resulting in a decline in handy and console game sales. However, there is rise in consumer spending on digital download, mobile gaming apps, social network games and used games. In such a scenario, GameStop Impulse will help the company to strengthen its foothold.

Going forward, with the increasing demand for online social gaming, the video game industry will soon see changes in business dynamics. Moreover, the social gaming market is witnessing healthy growth due to its social and interactive environment compared with the conventional platforms.

Currently, the video game industry is poised for strong growth in 2011. According to market research firm Gartner, the video game industry will grow at 10.4% to $74.4 billion from the 2010 level of $67.0 billion.

To be company specific, GameStop, which faces stiff competition from Amazon.com Inc. (Nasdaq: AMZN), is well positioned to benefit from the gaming products and PC amusement software market. The company follows a strategy of store extensions in productive regions and offers the largest collection of games.

Furthermore, GameStop is a significant player in the used gaming products market. The company provides a wide array of used video game products for both current and previous generation platforms. In addition, the market for these products has been resilient to the recent economic downturn.

However, weak consumer spending, the decrease in new game releases, deferred discretionary purchases and pricing pressure might dent results for the company.

We prefer to maintain a long-term 'Neutral' recommendation on the stock. GameStop also holds a Zacks #3 Rank, which translates into a short-term 'Hold' rating.

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