Apple Inc. (AAPL), Hewlett-Packard Company (HPQ) - P.C. Sales Slow, Again, But Not As Bad As Expected

P.C. sales continue to dwindle at the expense of smartphone and tablets. Two market research firms reported disappointing PC sales numbers for the third quarter. Gartner says Q3 PC sales slipped 8.6% to 80.3 million, and IDC reported a 7.6% decline to 81.6 million units. However, the news wasn't as pathetic as it could have been as IDC projected a worldwide decline of 9.5 percent for the quarter.

Normally, the third quarter is when the personal computer business ticks up as kids and young adults head back to school and college, which probably explains why the third quarter came in better than IDC projected.

However, any good vibes on not being as miserable as expected might not last long. IDC  analyst Loren Loverde believes, "Despite being a little ahead of forecast, and the work that's being done on new designs and integration of features like touch, the third quarter results suggest that there's still a high probability that we will see another decline in worldwide shipments in 2014."

As it is, Gartner says Lenovo held the number one spot for PC share at 17.6%, beating rival Hewlett-Packard Company (HPQ) for the second consecutive quarter. HP's market share stands at 17.1%.

Despite the overall decline in PC shipments, both research firms note that Lenovo experienced a 2.8% increase in unit sales while HP witnessed a 1.5% gain.

Although PCs are a dying breed, investors might find the like of Hewlett-Packard to be the best place to reside for exposure to the industry.

Another interesting piece of data we glean in the report is that Apple (AAPL) experienced a PC shipment decline of 11.2% in the third quarter. Perhaps, iPhone and iPad are cannibalizing MAC sales. It's something to watch in the upcoming quarterly results. Smartphones and tablets have compressed the tech giant's margins, falling Mac sales might further the problem; although management recent said margins will be higher thanks to iPhone 5S sales. Nobody actually wants the 5C as its price has been cut by many vendors already.

It's possible that PC sales flatten out into April 2014 because of Microsoft's decision to no longer support XP. While many PC users might trade in their computer for a tablet, plenty of corporations are likely to upgrade to new equipment. However, we think arm-twisting will be temporary, and sales will continue to slide in 2014.

Overall: The PC is going the way of ! the VHS. It's our view that investors would be better served focusing on tablet leaders and suppliers. Even smartphone sales are beginning to moderate.