Flat-panel TVs get less pricey faster By Michelle Kessler USA TODAY
Wed Jul 19, 6:59 AM ET http://news.yahoo.com/s/usatoday/20060719/tc_usatoday/flatpaneltvsgetlesspriceyfaster Lower-than-expected demand for flat-panel TVs is spurring makers to cut prices - setting the stage for a bargain-filled back-to-school and holiday shopping season. A year ago, a 37-inch flat-panel model typically cost about $4,000. Now, some can be found for as little as $1,100, says television analyst Rosemary Abowd at Pacific Media Associates. From January to May, the most recent data available, average flat-panel prices tumbled more than 12%, she says. Expect prices to fall even more in coming months, Abowd says. TV makers generally offer discounts during the busy fall and winter shopping seasons. Prices "are good and are only going to get better," says television analyst Chris Connery at researcher DisplaySearch. Why the glut? Optimistic TV makers overestimated demand. LG.Philips LCD last week reported disappointing earnings and warned of an inventory glut. The joint venture of electronics giants LG and Philips is a leading maker of TV displays, a component that usually accounts for more than 50% of a flat-panel's cost. Philips Electronics this week reported a 69% drop in quarterly profit because of the shortfall. Rival AU Optronics has reported similar supply worries. So did 3M, which makes other flat-panel parts. (Another TV maker, Samsung Electric, issued a stronger report, but many analysts say it was because of share gains, not market strength.) These TV makers and others thought sales would surge in advance of the World Cup this month, especially in soccer-mad Europe. That would have provided a welcome boom during a normally slow time. But the sales jump never happened. The industry is still growing fast. Almost 42 million flat-panel liquid crystal display (LCD) sets are expected to be sold this year, about double the 21 million sold last year, DisplaySearch says. Sales of a competing kind of flat-panel, plasma, also are rising. "Growth isn't falling off the face of the Earth, it's just not as explosive as some people thought," Abowd says. She says companies may also have overestimated the number of people with enough disposable income for a flat-panel. Companies already are adapting. LG.Philips cut its capital equipment budget. Glassmaker Corning lowered its flat-panel sales estimates. It's difficult to say how long the oversupply will last during the slow summer sales months. JPMorgan equity analyst J.J. Park predicted in a recent research note that it would endure well into the second half of the year. But Park expects prices to pick up near the end of the year and into 2007. TV makers may also take advantage of low component prices to expand their often-thin margins. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
