Today: Research firms report that the personal computer industry suffered its worst decline in history during 2013, with Lenovo officially taking the PC throne from Silicon Valley giant Hewlett-Packard (HPQ). Also: Twitter's slide continues as stocks decline.
The Lead: A depressing year for PC industry likely the bottom, research firms report
The personal computer industry suffered through the worst decline in its history in 2013, research firms reported Thursday afternoon, as tablets' popularity in the holiday shopping season drove shipments down 10 percent and officially stripped Hewlett-Packard of its title of largest PC company in the world.
Personal computer shipments fell 6.9 percent year-over-year in the all-important holiday shopping quarter, Gartner reported Tuesday afternoon, the seventh consecutive quarter that the PC industry's performance declined from the previous year; IDC reported a slightly smaller decline of 5.6 percent. Overall, shipments dropped 10 percent in 2013, both research groups reported independently, which Gartner said matched the PC market's output in 2009 and represented the largest year-over-year decline in the industry's history.
"Holiday sales of technology products were strong in the U.S. market, but consumer spending during the holidays did not come back to PCs as tablets were one of the hottest holiday items," Gartner analyst Mikako Kitagawa noted in Thursday's announcement.
The one redeeming quality of Thursday's Gartner report for PC-focused companies is that the market seems to be turning in the United States, where the "PC market has bottomed out," Kitagawa said. New tablet-laptop hybrids -- such as those included in Intel's (INTC) Ultrabook initiative -- should begin to gain traction in 2014 as prices drop, with signs of that move appearing in the fourth quarter, Kitagawa reported.
IDC agreed, with Loren Loverde saying in Thursday's news release that "growth rates will continue to improve gradually during 2014 despite remaining in negative territory."
Silicon Valley's most prominent PC company, Hewlett-Packard, received some of the worst news in the report, as the two groups officially reported that HP lost the 2013 race to be the world's top PC company thanks to a "difficult quarter" to end the year, as IDC analyst Rajani Singh termed it. According to Gartner's report, HP shipped 13.6 million units worldwide in the fourth quarter, a 7.2 percent decline from 2012, to finish the year with total shipments of 51.3 million, 9.3 percent less than the previous year's total. IDC reported a similar performance, with an 8.5 percent decline in the holiday quarter completing an annual decline of 10.3 percent to 52.2 million units.
Chinese rival Lenovo, meanwhile, boosted its fourth-quarter shipments to finish the year with the highest total in the world, more than 53 million units, according to both reports.
Gartner first reported that Lenovo had moved ahead of HP in the third quarter of 2012, but research rival IDC still had HP in the lead, with the Palo Alto tech giant attributed to IDC's inclusion of the workstation segment, and HP ended 2012 as the top PC manufacturer in both group's tabulations. The storied Silicon Valley company was not as fortunate in 2013, however, admitting after both companies reported higher Lenovo sales in the second quarter that it had been beaten.
"As we do in all the categories we do business, we intend to be No. 1. We don't like being No. 2 and we don't plan to stay there. We are executing on our turnaround plan and have an aggressive market-segmentation strategy," an HP spokeswoman said Thursday in an email, noting recent releases similar to the hybrid devices Gartner believes will help in a 2014 turnaround.
The PC market has suffered as mobile devices overtake laptops as the computing device of choice worldwide -- "In emerging markets, the first connected device for consumers is most likely a smartphone, and their first computing device is a tablet," Kitagawa wrote Thursday.
Much of that change can be attributed to Apple (AAPL), which has overtaken HP as the largest Silicon Valley tech company in terms of revenues on the strength of iPhone and iPad sales. The company also sells PCs, however, and Gartner tracked strong gains in the U.S. for the Cupertino tech giant in that segment during the fourth quarter: Apple's domestic sales increased 28.5 percent from the 2012 holiday shopping quarter to 2.2 million units, the report stated.
HP stock gained 0.6 percent to $27.61 before the reports landed after the close of Thursday trading, with after-hours prices dipping slightly. Apple dropped 1.3 percent to $536.47 after CEO Tim Cook agreed to sit down with his counterpart at Samsung in an attempt to settle their patent fight.
SV150 market report: Twitter's decline continues as Wall Street falls
Wall Street stock indexes fell slightly Thursday ahead of the official kickoff to earnings season, as retailers were slammed for pulling down financial forecasts after getting a peek at their holiday sales. Tech stocks also suffered, with Apple's decline joined by yet another sharp drop from previously high-flying Twitter.
Twitter declined 3.8 percent to $57.05 Thursday, and has now fallen 17.3 percent this week as analysts downgrade the stock following big gains experienced at the end of 2013. Cowen analysts were the latest to join the anti-Twitter party, initiating coverage Thursday morning with an "Underperform" rating and $32 price target just a day after Cantor Fitzgerald gave Twitter its third downgrade in two weeks. However, while Cantor Fitzgerald noted that its downgrade was not based on material weakness but rather the high valuation of the San Francisco social-networking company, Cowen exhibited concern with Twitter's advertising business. "We conducted a survey of 50 ad buyers which overall suggested a mixed view of Twitter relative to peers," analysts John Blackledge and Thomas Champion wrote Thursday. The Wall Street Journal noted that the recent rash of negative notes has led to 30 percent of analysts following Twitter offering "sell" ratings or their equivalent, a higher percentage than all but 8 of the companies in the Standard & Poor's 500 index. "In a world where almost nobody says anything bad about stocks and people are saying something bad about this one, you should probably pay attention," Platinum Partners President Uri Landesman told the Journal.
Twitter rival Facebook also declined Thursday, losing 1.7 percent to $57.22 while planning the end of its "Sponsored Stories" initiative that led to a class-action lawsuit against the Menlo Park company. Google (GOOG) dropped 1 percent to $1,130.24 while opening up Gmail mailboxes to its Google+ social network, a move that could anger users of its popular webmail service; the Mountain View search giant's video service, YouTube, will receive a new feature in conjunction with Hollywood studio DreamWorks, Variety reported. Tesla Motors (TSLA) declined 2.5 percent to $147.53 as its next model of automobile, the Model X, is reportedly tested on short drives in Los Angeles. Nvidia fell 3.7 percent to $15.75 after the Santa Clara chipmaker suffered a downgrade from Canaccord Genuity analyst Bobby Burleson, who noted that other chip companies have a much lower price-to-earnings ratio. After Wednesday's big bounce after an acquisition offer, Riverbed Technology held steady, gaining a penny to $19.54 as bidder Elliott Management turned its attention to a similar gambit with Compuware.
The SV150 index of Silicon Valley's largest tech companies: Down 9.02, or 0.6 percent, to 1,491.52
The tech-heavy Nasdaq composite index: Down 9.42, or 0.23 percent, to 4,156.19
The blue chip Dow Jones industrial average: Down 17.98, or 0.11 percent, to 16,444.76
And the widely watched Standard & Poor's 500 index: Up 0.64, or 0.03 percent, to 1,838.13
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.