TV Troubles: Flat-Panel Market Flattens

Well, this was inevitable.

The weakening economy has begun to take a toll in the global market for televisions, which has ominous implications for consumer electronics retailers, flat panel manufacturers and TV chip producers.

In a note this morning, Longbow Research analyst Tayyib Shah says checks with both OEMs and panel vendors “indicate weak demand patterns in the overall TV market.” He says those TV makers who will meet Q2 guidance on units are doing so only through share gains. In the U.S. market, he writes, soft demand has triggered a decline in ASPs, “as consumers shift to cheaper, smaller models.”

Shah notes that Sony (SNE) has dropped Bravia prices by 10%-15%, and that Samsung has matched the cuts. He notes that Sharp has shifted capacity from 50-inch panels to 32-inch panels due to disappointing demand for larger TVs. The analysts notes that his contacts “are becoming increasing anxious about U.S. demand” in the second half given the headwinds facing consumer spending. He also notes that domestic brands in China are weak, due to both softer-than-expected demand and market share losses to tier-one brands.

None of this should be all that surprising, given rising oil and food prices, ongoing trouble in the housing sector and rising unemployment; keep a close eye on the July quarter results at Best Buy (BBY) and Circuit City (CC).

Comments

[adan]

very interesting from-the-trenches info, thanks!