Stock Codes: CCC.L / CCC LN
Panmure Gordon EPS Estimates
2012 A 35.50p
2013 E 39.30p
2014 E 40.97p
Market Cap: £884m
Last published research 29 November 2013
George O’Connor +44 (0)20 7886 2755
Adam Lawson +44 (0)20 7886 2749
Specialist Sales
Giles Leather +44 (0)20 7886 2701
Expect a positive FY update
We retain our Buy ahead of next week’s FY trading update. Despite the news
today of the fall in PC shipments (see below) we think that the budget flush
season ended as expected (we normally expect c£2.0m of PBT in the post-
Christmas period). While news of declining PC sales this morning may unnerve
some, we remind that on 8 April, 2014 Microsoft is scheduled to release
its last security update for Windows XP. That end date is now less than four
months away. Users need to upgrade out of the problem. As the UK’s largest
XP upgrade shop, Computacenter has a huge opportunity in this market. A
bit like Y2K of old – expect a late flurry closer to the finishing line. Our target
price is 668p and we retain our Buy recommendation.
 W hat to expect. We think that Computacenter will indicate that it ended 2013 in line
with consensus. Of the markets the UK, had a strong finish to the year, in France issues
will be described as ‘ongoing’ and Germany will have reported Q4 growth.
 D eclining PC shipments – oh the ying and yang of it. Q4 PC sales figures from
analysts Gartner and IDC show a 7% YOY and 6% YOY fall in worldwide PC sales
respectively – the seventh consecutive quarter of decreasing PC sales. There is a switch
with the growing popularity of smartphones and tablet computers, as mobile devices are
less expensive, more convenient and all in more appealing than PCs in areas like work,
entertainment, information and communications. Shipments of desktop and laptop
computers had never slipped by more than 4% in any other previous year. Somewhere
between 314m and 316m PCs were shipped last year, according to Gartner and IDC – so
shipments are at the same level as in 2009.
 T hat XP sales driver. On 8 April 2014, Microsoft stopped issuing security updates for
Windows XP, which will leave a whopping one-third of the world’s millions of PCs still
running Microsoft’s 12-year-old client operating system. According to Gartner, the
global installed base of PCs at the end of 2013 will be 1.63bn units. Very large companies
may still have the option to pay Microsoft for dedicated support (US$200 per desktop
for year one) but many users will upgrade the PC from XP, avoid Vista – and probably
try for 7 avoiding 8.1 if possible. Eighty-five per cent of PCs in the NHS are still running
Windows XP. The NHS in England is one of the world’s largest employers, with 1.7m
FTEs. Users of the Microsoft XP operating system will need to migrate before being
targeted by every piece of villainous malware in the universe. How many PCs will still be
out there running Windows XP next April? That’s the big question. Sources estimating
that XP-powered machines constitute between 20.5% (StatCounter) and 31.42%
(NetMarketShare) of the installed base of PCs and Macs worldwide.
 C omputacenter opportunity. If we assume that 1-2% of those machines upgrade or
die each month for the next six months, that still leaves more than 100m PCs still
running Windows XP when security updates stop next April. Let’s say users will upgrade
the PC – say £500 apiece, across 5,000 seats and Computacenter does about 8 accounts
– we understand that there are currently at least 10 major UK and US organisations with
more than 5,000 seats that are currently mid-migration. As there will be a data migrations
issue. Computacenter will do more than pass through – and we think that even on 2%
margin – consequently there is an uptick


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