Staples supplies bad news on PC sales

Office supply retailer lays out some hard numbers for shrinking PC sales. Tablets are where the action is.

Second-generation Nexus 7: tablets are the future, said Staple's CEO.
Second-generation Nexus 7: tablets are the future, said Staple's CEO. Google

While analysts are typically the bearer of bad news for the shrinking PC market, Staples delivered some sobering news of its own today.

Ronald Sargent, chairman and CEO of the office supply retailer, offered his assessment of where the market is going during the company's earnings conference call Wednesday (via Seeking Alpha):

You just look at computers being replaced by mobile devices, whether it's phones or tablets, and it used to be computers were 95% and tablets were 5%. Now it's about -- it looks like about 60% computers and about 40% tablets. So that kind of gives you a sense of where that market is moving, and tablets are going to be, not replacing, but certainly bigger than computers are soon.

The operative phrase here is, "tablets are going to be....bigger than computers are now."

For Staples, this is a critical data that it uses to decide what it puts on the floor and sells to customers so it can turn a profit.

Demos Parneros, president of North American Stores and Online, said this.

The game is how quickly can we reduce space in our stores in these unproductive categories...to eliminate or reduce space in these sort of, let's call them, dying categories or weak categories and then replacing that with things like mobile phones, where we're going to 1,000 stores.

Staples reported today that net income in the second quarter sank to $102.5 million, or 16 cents a share, from $120.4 million, or 18 cents a share in the same period last year.

Analysts had been expecting a profit of 18 cents a share, according to Thomson Reuters.

And speaking of analysts, IDC and Gartner supplied some grim second-quarter number for PCs. IDC said the PC market shrank 11.4 percent while Gartner said 10.9 percent.

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