Goldman Sachs sees tablets eating into the market for PCs based on Intel processors and Windows in 2011, implying a tough time ahead for Dell Inc. and Hewlett-Packard Co.
"What is surprising is that many of these products (tablets) are not utilizing Intel microprocessors or a Microsoft operating environment ... this would be the first time in three decades that a non-Wintel technology has made legitimate inroads into personal computing," analyst Bill Shope said in a note to clients.
The brokerage resumed coverage of the hardware sector with a "neutral" rating, saying cyclically driven fundamentals are giving way to secular growth themes for individual vendors.
Goldman Sachs restarted Apple Inc. at "buy" as it expects new product launches next year to continue to add to the company's consumer PC market share.
Shope, who has "sell" ratings on Dell and HP, said they need to investment more in organic growth and M&A, which would in turn weigh on their earnings.
"Rich cash balances of most technology companies and the low cost of corporate debt has made M&A a key theme within the sector," he said.
Dell on Monday agreed to acquire data storage operator Compellent Technologies Inc. for $960 million.
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