Personal computers are, let's face it, pretty commoditised affairs. Apart from a few bells here and whistles there, they are all of a muchness. Some are household names, others more popular with business users. Even equity investors see little difference – although their share prices tell different stories.
Consider the two largest US-based PC makers and Intel, whose microprocessors power most of the computers they produce. Hewlett-Packard and Dell – the latter was once the world's biggest manufacturer but is now in third place after Taiwan's Acer – trade on 12 times next year's earnings. Intel is only slightly more richly valued on 13 times. At a discount to historic valuations and the broader market, this suggests that sub-par growth prospects for all three companies lie ahead.
Recent performance has diverged though. HP's share price has rallied strongly over the past six months as earnings forecasts for 2010 have risen by 8 per cent. The hardware maker's shares are now within touching distance of their 2008 high. Yet expectations for Dell are largely unchanged, and its shares languish well below last year's levels. Meanwhile, Intel's shares have risen by 60 per cent since April and its earning estimates have risen by three quarters.