Thanksgiving sales satisfy PC makers

HP, Emachines and others report a good start to holiday consuming. But they still could be in for heartburn, analysts and executives say.

John G. Spooner Staff Writer, CNET News.com
John Spooner
covers the PC market, chips and automotive technology.
John G. Spooner
4 min read
The opening days of the holiday shopping season brought at least a small dose of good cheer to anxious PC makers.

Computer manufacturers on Wednesday said that holiday sales of PCs got off to a relatively good start this year, thanks to aggressive promotions, with unit sales matching or exceeding expectations for the Thanksgiving weekend. But executives and analysts still cautioned that the end-of-year shopping spree as a whole may not be anything to rave about.

For the top two retail PC sellers in the United States, Hewlett-Packard and Emachines, unit sales over the holiday weekend were favorable. HP matched its expectations, while Emachines saw fourfold increases in some areas, representatives from the companies said.

"We came in, as I think most manufacturers and retailers did, cautious," said Bill DeLacy, vice president of U.S. consumer sales at HP. "We've been pleasantly pleased with consumer response."

HP and Emachines attributed their performances to aggressive promotions, low prices and a good consumer turnout at retail stores, which opened early and offered a host of deals on Friday.

Toshiba, a leading seller of notebook PCs at retail in the United States, also reported sales that met its expectations, though it declined to give details. Dell Computer and Gateway, the top direct sellers to consumers in the country, declined to comment on their Thanksgiving sales. Apple Computer also declined to comment on sales.

Although HP's and Emachines' sales over the weekend were a good sign, it's still too early to declare that this holiday season will be a happy one for the PC industry. It will take more time to determine whether those tallies were a fluke, with consumers simply reacting to bargain pricing, or whether sales will hold up through Christmas, analysts and executives said.

So far, with results still rolling in, PC sales have been following normal seasonal patterns, showing increases from October to November, said Steve Baker, an analyst with NPD Techworld, which tracks retail sales. This year's total holiday unit sales are still unlikely to surpass last year's performance, he said, due largely to weaker sales of desktop PCs.

Many consumers are extending the life of their current machines and opting to replace their CRT (cathode-ray tube) monitors with flat panels or to upgrade their printers instead. Others are buying notebooks.

"I don't see anything that's jumping out at me saying sales aren't going to perform seasonally," Baker said. "But so far, unit volumes are down from last year."

No great enthusiasm
A shorter holiday sales season--defined as the period from the Friday after Thanksgiving to the day before Christmas--bodes poorly for retail gains, a Morgan Stanley report stated Wednesday. With six fewer days overall, and two fewer weekend days, in the 2002 season than in 2001, "each day must represent sales growth over last year just to keep holiday sales flat," the report said.

In general, Morgan Stanley said, "our retail contacts seemed more relieved that sales came in rather than genuinely enthused that this will be a strong holiday season."

Even HP's top cheerleader, CEO Carly Fiorina, voiced caution that the weekend's strong retail sales may not be a harbinger of success in this year's short stretch between Thanksgiving and Christmas.

Given the time crunch, Fiorina said at at Tuesday meeting with financial analysts, "it needed to be a good Thanksgiving weekend."

Baker predicts that holiday desktop sales will show a year-over-year decline of about 10 percent. Notebook unit sales could grow by as much as 10 percent, but that sales won't be enough to boost the overall number, he said.

HP's numbers reflect the mixed market conditions. Now the largest retail PC seller in the United States after its merger with Compaq Computer, HP saw desktop unit sales over the weekend fall compared with last year. Notebook unit sales increased, however, partially offsetting the decline in desktops, DeLacy said.

The company, which refreshed its PC lineup in early October for the holidays, has modest internal expectations for year-end PC sales.

"We had a conservative plan coming into the holidays," DeLacy said, and so far, "we met our plan."

Meanwhile, HP saw booming sales last weekend for photo printers and multifunction devices, which can print, copy, fax and scan documents, with year-over-year increases ranging from 50 percent to 200 percent, DeLacy said. Some of those gains were offset by a decline in sales of traditional printers, but the overall business saw double-digit gains in unit sales year over year, he said.

For its part, Emachines had a good weekend, with sales jumping as much as four times at some retail chains, said Gary Elsasser, the company's vice president of technology.

"For us (sales) were much better" than last year, he said. "They beat our expectations."

Emachines cooked up several special models for retailers such as Best Buy and Wal-Mart. Best Buy paired one model with a 15-inch flat-panel display from Samsung for $499 after rebate. HP also has a desktop, monitor and printer bundle on sale at Wal-Mart.

Although they declined to comment on sales, Apple and Dell said they saw heavy traffic.

The Mac maker said its retail chain had its busiest week to date, with more than 365,000 people passing through the doors of its 51 stores over five days from Nov. 25 to Saturday, a company representative said. The stores were closed for Thanksgiving on Thursday.

Dell said in a statement that it had more than 1 million hits on its consumer Web site over the Thanksgiving weekend.

News.com's Ian Fried contributed to this report.