What's going on?

HP gave a disappointing � but not surprising � quarterly update earlier this week.

What does this mean?

Looks like PCs are falling out of fashion: industry analyst Gartner said global shipments dropped 13% between April and June, marking the sector�s worst quarter in over nine years. And spare a thought for poor HP, which saw the biggest decline in shipments out of all the companies tracked over that time period. So it�s not a huge surprise that the PC maker saw sales of its consumer computers fall 20% last quarter from the year before, mainly led by sales of its notebooks falling by nearly a third. HP�s printer sales didn�t help either, falling by 6% as supply shortages continued to plague the division. And sure, sales of the company�s commercial PCs rose by 7% last quarter, but that wasn�t enough to save its overall revenue from falling a worse-than-expected 4%.

Why should I care?

Zooming in: Business isn�t booming.
Those commercial PCs have been buoying up HP�s falling consumer sales for a while, but that might soon come to an end: the company said business customers are starting to cut down on spending ��and ramping up hiring freezes � to survive in an increasingly dire economy. On top of that, HP said it�s expecting evaporating consumer demand to continue for at least a couple more quarters. So left with little choice, HP cut this year�s profit outlook to below analysts� expectations.

For markets: Investors are logging off.
Rival Dell also gave a disappointing outlook last week, citing many of the same issues that troubled HP. That�s not what investors banked on when they swapped high-flying tech stocks for PC makers earlier this year, keen to snap up their growth at much lower valuations. But they�re heading for the exits now: Dell and HP have seen their stocks fall 13% and 11% in the last month, much worse than the tech-heavy Nasdaq 100 index�s 4% dip.