Merrill cuts 2001 PC growth forecast to 3 pct; sees 'surprisingly strong' 2002

SAN FRANCISCO (AFX) - Merrill Lynch is slashing its growth forecast for the world PC market for 2001 and now expects unit sales to rise only 3 pct from last year, way down on the broker's previous estimate of 7 pct.

	    But it expects 2002 to be "surprisingly strong" and provide the much-anticipated turnaround in the industry.

	    The comments come after a raft of weak profit figures from U.S. PC makers, which are suffering from falling sales as customers cut back on IT spending.

	    Recent data from research firm IDC pointed to only a 4.1 pct year-on-year rise in unit sales of PCs in the first three months of 2001.

	    In a note to clients, Merrill analyst Steve Fortuna said the PC sector continues to be plagued by weak demand, especially in the U.S.

	    "We have had several negative data points since our last reduction of March 26 that have led to this unit growth revision," Fortuna said. "All of our checks continue to suggest that PC demand remains weak, especially in the U.S."

	    Looking further ahead, however, Fortuna said he expects 2002 to show a strong pickup in sales, with Microsoft Corp's new Windows software expected to be the major catalyst for PC upgrades.

	    "To the extent that this year proves to be weak, we feel next year could be surprisingly strong," he said, raising his growth forecast for 2002 to 17.5 pct from 15.5 pct.

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