No respite for HP, Dell in Windows 8: BMO
(Reuters) - Microsoft's (MSFT.O) long-awaited launch of the Windows 8 OS may not change the fortunes of PC makers, BMO analysts said, lowering their price targets on the stocks of Hewlett-Packard Co (HPQ.N) and Dell Inc DELL.O.
PC sales have been tepid for most of the last year. But volumes registered a surprise 1.9 percent growth in the first quarter of this year, according to Gartner.
Windows 8 OS's long-awaited launch this year is widely expected to boost PC sales. But BMO was less optimistic.
"Windows 8 will prove to be a disappointment, at least out of the gate," analyst Keith Bachman wrote in a note.
Bachman — rated four stars by Thomson Reuters StarMine for the accuracy of his earnings estimates on the companies under his coverage, including HP and Dell — pointed at margin concerns for the PC makers, citing higher component costs.
HP is the world's biggest PC vendor, while Dell holds the number three spot following Chinese rival Lenovo Group Ltd (0992.HK). Both the companies are expected to report quarterly results next week.
Apart from Dell and HP, BMO's Bachman also expressed growth concerns for data storage equipment maker NetApp Inc (NTAP.O) and networking components maker Brocade Communications Systems Inc (BRCD.O) — both dependent on spending by businesses.
The analyst lowered his price target on NetApp to $42 from $45, and to $5.75 from $6.75 from Brocade.
(Reporting by Himank Sharma in Bangalore; Editing by Joyjeet Das)