Stormy Predictions
by Steve Smith -- TWICE, 1/28/2007
When you are in the news business you try to avoid predictions as much as possible, especially during stormy economic times.
I didn't follow my own advice. In this space in our Jan. 7 issue I talked about business prospects for 2008. "Energy costs are still too high, the credit crunch is still around affecting just about everything, and some are predicting a slowdown or recession."
Later on in the same column I wrote that during presidential election years CE sales go up, led by TV sales. "Some say the party in power in Washington spins to make things seem better than they are."
Based on the gyrations in stock markets worldwide this month, especially this past week, the first observation looks like the understatement of the year. And the second comment? The White House, Congress and just about everyone else in Washington spun like mad last week to keep stock markets worldwide from collapsing. And they will keep spinning to try, at the very least, to cushion many from the soft economy that we will be facing for much of the year.
Now if you are looking for general financial insight and advice in this space ... boy, are you in the wrong neighborhood.
What I'd like to point out is that the Fed's rate cut and Washington's proposed stimulus package are a short-term economic fix. Wall Street's somewhat self-serving advice is not to cash in your stock, but try to ride out this tough period because, in the long-haul, stock prices will rebound.
What does all this mean for the CE business? Well, CE has a short-term advantage of its own, as well as positive outlook for the long haul.
Short term, January is traditionally the second-largest sales month of the year, right behind December. Gift-card business helps the first part of the month and the NFL playoffs, especially the Super Bowl, help the back end. If you believe the new survey by the National Retail Federation, shoppers plan to buy 3.9 million TVs for Super Bowl Sunday, up from 50 percent last year.
We will soon get a first look as how retailers fared in January when the publicly held chains report their sales numbers in early February.
Over the long haul, in this case the next 12 months, no one has canceled the Feb. 17, 2009, switch from analog to digital TV. Check our story from CES on p. 1 with FCC chairman Kevin Martin if you don't believe me. This deadline, and all the hype surrounding it, should still drive HDTV sales to new heights.
But will the sales volume be as high as expected? Will profit margins be at least adequate? For retailers, to make profits work, add-on sales will have to be the norm. And for manufacturers, more marketing is crucial.
Again, what usually does happen in tough times is that consumers cut expenses — a new car, family vacations, eating out — and hunker down at home. Consumers usually want entertainment, which usually means that CE should be able to weather this economic storm.
That may not be a prediction, but a hope on my part, based on the industry's past performance.
Starting in February, the usual schedule of supplier line shows and buying group meetings will begin. As everyone meets and exchanges ideas we will soon see how CE will fare in this stormy economic climate.
No related content found.
Featured Company
-
Brightpoint
BrightPoint is a global leader in mobile device lifecycle services. We provide a full suite of end-to-end supply chain and customization solutions to manufacturers, retailers and carriers in the mobile device industry. In a world that is increasingly connected with ever-evolving ..more
VIEW ALL GALLERIES