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Retailers Say Sales of PCs Are Lagging : Computers: What some analysts thought would be a second record-setting season is looking like a disappointment.

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TIMES STAFF WRITERS

After two disappointing weekends, computer retailers who had high hopes for a second record season are fretting that not many personal computers will wind up under trees this Christmas.

Retailers had braced for an onslaught of customers over the Thanksgiving weekend in expectation that sales this quarter would exceed last season’s record of $7 billion by as much as 30%. But with 21 shopping days remaining until Christmas, many computer sellers now say they will be happy just to match last year’s sales.

“I wish it was busier,” said Colby Wolfinbarger, who is in charge of computer sales for Radio Shack in Eagle Rock Plaza.

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With the popularity of the Internet and residual hype from the August introduction of Microsoft’s Windows 95, analysts had predicted another record-breaking year for computer sellers. A wider selection of games and educational software for PCs was expected to give computer sales an additional boost.

But although last year millions of Americans used Christmas as an occasion to buy their first home PC, ominous signs began building last week that retailers might find coal instead of gold in their Christmas stockings.

On Friday, Apple Computer Inc. slashed prices on its desktop PCs--including two 3-month-old Power Macintosh models--by 8% to 25%, a move typically taken to boost flagging sales. Analysts said it was an unusual step for the Cupertino-based PC maker because the Christmas shopping season had just gotten under way.

Also, Intel Corp., maker of the chip that drives 80% of existing PCs, disclosed that a top customer is having a hard time paying its bills. Industry sources said the customer is Packard Bell, the leading U.S. maker of PCs, and that the company’s financial problems are due to a glut of unsold machines. Without denying the report, a Packard Bell official Friday said all is well at the company and that its total sales are expected to grow this year.

“Retailers are worried because activity on Thanksgiving weekend wasn’t what it should have been,” said Seymour Merrin, president of Merrin Information Services Inc., a Palo Alto research firm that tracks computer sales. “I’m not yet panicking, but there are people out there who are.”

At least a few stores are meeting analysts’ original expectations. Mike Bohen, general sales manager for Computer City in West Los Angeles, says his store sold more than 150 PCs this weekend. “The computer business seems to be picking up every day,” he said.

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But Computer City’s experience seems to be the exception rather than the rule. Many retailers reported that although stores were not exactly empty, they were no more crowded than they would be on an average weekend.

Best Buy, a Minneapolis-based electronics retailer, said that sales after Thanksgiving Day have been “less than planned.” PCs and peripherals traditionally account for about 46% of Best Buy’s sales.

Smaller retailers reported similar problems.

“People are not buying right now,” said Hashmi Muba, a computer salesman at Computerlane in Canoga Park.

After suffering through a slow Thanksgiving weekend, John Tanaka, sales manager for Computer Station in Long Beach, now says he expects to sell about half as many PCs as he did last year.

“In December [shoppers] would rather spend their money on skiing or parties,” Tanaka said.

Even at stores where foot traffic has been relatively high, sales are sluggish. Only 10 PCs were sold at a crowded Office Depot in Glendale.

“We’ve had a lot of looky-loos,” a salesman said.

Why the slump?

In general, shoppers are short on cash. With U.S. consumer debt at an all-time high, many people might be delaying purchases of big-ticket items until after their gift-giving obligations are met.

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Also, with roughly a third of American households already owning at least one PC, the market is reaching saturation. With fewer potential first-time buyers, PC makers must turn to consumers purchasing a second or third computer to achieve continued sales growth, according to a survey released today by Link Resources Inc. in New York.

But selling to an existing PC owner can be far more difficult than to a neophyte. Even mighty Microsoft has had a difficult time persuading consumers to upgrade to Windows 95, according to Nick Donatello, president of Odyssey Research of San Francisco.

Donatello estimates that only 6% of consumers with home PCs have purchased Windows 95 and that only 10% will do so in the next six months.

Savvy consumers know that it pays to wait, that they can usually find a better deal if they hold out for lower prices. This weekend, Circuit City stores offered a $150 discount, or no interest for a year, on any computer and monitor, and CompUSA tried to attract customers with instant rebates of $200 on some PCs and laptop models.

In the meantime, retailers are trying hard to stay optimistic. Like many, Muba of Computerlane predicts business will pick up closer to Christmas.

“A lot of people are waiting until the last minute--we hope,” he said.

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