Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Apple Inc. (AAPL), Microsoft Corporation (MSFT): The Mac Is Roaring Back While the PC Gets Weaker

Last quarter, there was no sugarcoating it: Apple Inc. (NASDAQ:AAPL)‘s Mac shipments were surprisingly weak. Mac units came in well below anyone’s best guesses, and the shortfall was primarily related to the redesigned iMacs that were being faced with supply constraints related to full display lamination. Even as the broader PC market has been rather weak lately, the Mac dramatically underperformed the overall market.

This quarter, things might be about to change, as the Mac is roaring back while the PC gets even weaker.

The Mac is back
According to estimates from market researcher NPD last month, Apple Inc. (NASDAQ:AAPL)’s domestic Mac shipments soared by an impressive 31% year-over-year in January alone. Now NPD is pegging the Mac maker’s U.S. unit shipments as growing 14% year-over-year throughout the first two months of the year. Piper Jaffray analyst Gene Munster is sharing the data alongside a recent research note, noting that the comeback is thanks to easing iMac constraints.

The figures only relate to U.S. shipments. Prior to the recent reporting changes, Apple Inc. (NASDAQ:AAPL) used to disclose Mac units shipped to each geographical region, with Americas and retail comprising the bulk of unit sales.

Source: SEC filings. Calendar quarters shown.

Munster is modeling for an overall 5% drop in Mac sales during the March quarter. That may not initially strike investors are “roaring back,” but remember that Apple Inc. (NASDAQ:AAPL) posted an underwhelming 22% decline last quarter, breaking its multi-year streak of outperforming the PC market, so a negative 5% would be quite an improvement sequentially. The analyst’s estimate puts Mac units in the neighborhood of 3.8 million this quarter, following an expected seasonal decline coming off the holidays.

It’s also worth mentioning that a negative 5% result this quarter would allow Apple Inc. (NASDAQ:AAPL) to return to its PC-market-beating ways, since new data shows the broader PC market performing even worse than initial expectations.

The PC is slacking
IDC now believes first quarter PC shipments in China are going extremely slow, in part due to government budget cuts and anti-corruption measures that are putting a drag on sales. China represented 21% of global PC shipments last year, so any softness in that region will weight on the broader market.

The transition to Microsoft Corporation (NASDAQ:MSFT) Windows 8 has been tough on OEMs and suppliers (and Microsoft Corporation (NASDAQ:MSFT), too), and that isn’t expected to ease up any time soon. IDC predicts first quarter PC units to fall by 7.7%, with any possible surprises more likely on the downside than the upside, according to its supply chain data. The drop could even touch double-digit territory in Q1, with a mid-single-digit fall next quarter. The only way that the PC market will rebound during the latter half of the year is if new designs are introduced at competitive pricing relative to tablets.

A mixed opinion
The PC pessimism echoes sentiment from Nomura Equity analyst Rick Sherlund. Last week, Sherlund said Windows 8 has been “awkward” so far and that the inherent compromises in the platform have hindered adoption. Over time, the situation should improve as Microsoft refines the operating system and OEMs deliver new form factors at competitive price points.

However, Sherlund does express optimism in the medium-term, predicting shipments to rebound in the second half of the year, which is why overall he still rates Microsoft a “buy” and has a $32 price target on the software giant.

Every little bit helps
Ultimately, Macs remain a small portion of Apple Inc. (NASDAQ:AAPL)’s overall business nowadays as mobile devices comprise the bulk of sales. We’re talking about just 13% of trailing-12-month sales coming from Macs, compared to 72% for iPhones and iPads combined. But with fears that Apple may miss its own guidance in the current quarter, every little bit certainly helps.

The article The Mac Is Roaring Back While the PC Gets Weaker originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.