Margins & The Bottom Line

By Steve Smith -- TWICE, 5/7/2007

Probably many noticed with interest that Matsushita, worldwide marketers of the Panasonic brand and the leader in plasma TV, posted a 41 percent net profit increase for its recently completed fiscal year, ended March 31. (See p. 41.) The same is true for Sharp, one of the leading makers of LCD, reported a 14.7 percent net income gain for its fiscal year. (See p. 11.)

Of course, other suppliers have and will post losses for the first quarter of this year or for the fiscal year. But both of these manufacturers have been aggressive competitors in the flat-panel TV market and they had to surprise plenty of industry experts.

What wasn't surprising has been the continuing after-effect on retailers of losing, as NATM's Bill Trawick (see p. 1) and others have put it, of a "year's worth of margin" in flat panel. Take a look at recent headlines about some long-time retail leaders in this industry — Circuit City, Tweeter, RadioShack, CompUSA and others.

Flat-panel TV isn't the only reason for their problems, because each retailer has some unique challenges to tackle. But narrower flat-panel margins came at absolutely the wrong time.

What also shouldn't be surprising is that regional retailers and independents that belong to buying groups are in many cases surviving and thriving. Granted, as one of our headlines put it, 2007 has been a "choppy" year at retail so far with flat-panel pricing getting weaker as demand continues to zoom, major appliance sales taking a dip due to slow housing sales and an overall lack of consumer confidence.

But when you take a look at buying groups and their members (see story on p. 14) many seem to be nimble enough to add lines, open an extra store or two, expand services and installation and make a profit in this type of retail environment. When you hear stock analysts, they really don't know independents and regional retailers in this industry. Yet during most years many are able to survive and thrive with little fanfare.

Jack Valenti, 1921- 2007

Jack Valenti, head of the Motion Picture Association of America for four decades and a former aide to President Lyndon Johnson, died on April 26. He was 85.

Valenti was a passionate advocate in Washington for the movie industry and was given credit for developing the movie ratings system. He bitterly attacked the legality of the VCR but eventually came around and realized that new technology should be embraced.

There isn't enough space here to go over the highlights of Valenti's long and distinguished career. I suggest that you go to TWICE.com and read the obituary written by our colleagues at Variety. And to find out about how this gentleman made his mark on a sometime adversary, again go to TWICE.com and read the stirring tribute in our Industry Voices section by Consumer Electronics Association president/CEO Gary Shapiro.