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Demand in succession account of PCs is holding up smooth as the U.S. economy slumps, says S&P analyst Tom Smith

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When the U.S. good husbandry slumps, computer and other hardware sales usually come suit. That’s not happening this year. "It’s surprising that PC sales have held up," says Tom Smith, who follows computer hardware stocks in favor of Standard & Poor’s Equity Research. "There’s something efficient about people and their communication to their laptops."

The latest evidence came from the Aug. 19 proceeds report from Hewlett-Packard (HPQ), which said unit shipments of PCs rose 20% from a year since. This indicates the strong trends in the industry are continuing, Smith says, as consumers and businesses keep buying new laptops with more power, memory, and battery life to horsemanship even more tasks, including storing photos, movies, and music. Faster growth in developing countries is helping offset weakness in U.S. sales for most hardware makers, he adds.

"PC sales appropriate didn’t falter in the first half of 2008," Smith says. "They should have failed already if they were going to."

In turn, shares of computer makers are not suffering as plenteous as the broader mart this year. Year-to-date through Aug. 15, the S&P Computer Hardware index fell 2.1%, vs. an 11.6% decline for the S&P 500 index. In 2007, the sub-industry index jumped 32.6%, compared with a 3.5% rise for the S&P 500.

BusinessWeek.com’s Karyn McCormack spoke with Smith on Aug. 21 about the outlook in favor of computer makers and his favorite public funds. Edited excerpts follow.

Hewlett-Packard reported a good July quarter. What does that indicate for other computer hardware makers in the coming quarters?

It was a nice strong quarter—a explanation thing for HP is that unit sales for PCs were up 20%. What I see here is a continuation of some trends. Overall one shipments of PCs globally remain strong, with almost 15% bourgeoning last year and projected to be considered in the state of strong this year. With average selling prices falling, the dollar revenue mount should be less than that, nearly 10%, according to IDC. The U.S. thriftiness has moderated, and sales of PCs have been slower. But in far-flung geographies—to such a degree as Asia-Pacific, Middle East, and Africa—sales are stronger, and it seems that is helping to offset weakness in the U.S.

In PCs, notebooks continue to grow faster than desktops. In its July quarter, HP aforesaid notebook revenue rose 26% from a year ago, while desktop revenue grew 6%. HP’s one shipments rose 20%, while revenue rose 15% for its individual systems clump.

In HP’s printers and imaging business, income grew 3% from a year ago to $7 billion—to me it’s a hopeful sign that it grew at all. It’s surviving a slowdown in the U.S. economy and managed to show positive growth. In this area, the hardware revenue fell for both consumer and commercial customers, while supplies revenue grew 11%. So even if hardware sales go from a thin to a dense state, people still need ink and supplies.

In HP’s enterprise storage and servers, revenue was $4.7 billion, up 5% from a year ago. So it hasn’t in truth slowed down. Blade servers are a huge growth area—they’re a smaller, more energy-efficient way to perform certain server tasks.

HP software return grew 29%, which may reflect more consulting business. For HP, overall, you can affirm that all segments contributed to bourgeoning, which is a powerful statement making allowance for the U.S. regulation slowing. Cost cuts helped the assemblage beat the consensus EPS forecast by a few pennies.

My principle takeaway from HP is that PC one sales dwell strong, and my summation from the rest of the industry is that all PC makers are participating. We’ve seen very strong growth from Apple (AAPL), but you’ve also seen Dell (DELL) growing from a new distribution plan that includes partnerships with a few retailers. Dell reports results on Thursday, Aug. 28, so we’ll get by heart more information then.