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IDC to lower 2000 US PC sales forecast

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CIOL Bureau
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Peter Henderson

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SAN FRANCISCO: Computer research company International Data Corp. (IDC) is

preparing to cut its widely watched forecasts for personal computer sales this

year because of the slow start to holiday buying season, company analysts said

on Thursday.

IDC's revised forecasts, to be issued Monday, will reflect the sudden and

unexpected slump in US household consumer purchases taking hold in the fourth

quarter, analysts said.

"The previous US forecast for all PCs is in the mid to high teens for

the year. This will be substantially below that. There's an issue as to whether

it'll even be double-digit," Roger Kay, an IDC analyst, told Reuters.

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"Retail's been pushing back for a month now. Inventory's been building

up. I think you're gonna see some pretty serious price wars," he said.

Announcements by computer makers Gateway Inc. and Hewlett-Packard Co. in the

last two days have intensified fears that computer sales are heading into a

broader slump.

Loren Loverde, director of IDC's worldwide PC tracker program, laid the blame

on consumers who, he said, have no incentive to upgrade existing computers.

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"We had expected a fourth-quarter uptick, but the softness in that

segment of the market based on some vendor results right now is a little bit

unexpected."

Stephen Baker, an analyst at PC Data Inc., which focuses on consumer sales,

said retail spending on personal computers might not grow at all in 2000.

"It is probably going to be about flat with last year with PC retail

sales. I think everybody had been looking at the 15 per cent (growth)

range," he told Reuters.

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Industry analysts had been looking for a particularly strong fourth quarter

this year, because of a relatively weak result in 1999, when rebates from

Internet providers had drawn sales earlier in the year.

"This is a big surprise," said Baker. "People thought given

what we had seen last year, this year there would be some real opportunities for

Christmas," he said.

The silver lining is that the consumer electronics industry as a whole is

still doing relatively well because of strong sales of digital cameras, CD-ROM

drives and other computer accessories.

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One indication of that trend: October retail sales for the industry as a

whole were up 12.2 per cent compared with a year earlier to around $3 billion.

But excluding desktop PCs, sales grew a faster 16.3 per cent to $2.35 billion,

he said.

"I don't think that this is a PC products industry issue. It is a PC

issue. People are still spending money," Baker said.

(C) Reuters Limited 2000.

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