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Mixed CE Sales Expectations On The Horizon

New York — Expectations for consumer electronics sales are mixed for the foreseeable future, based on recent research and analyst reports.

A report released this month from the ChangeWave Alliance, which regularly surveys its 15,000 business, technology and medical professional members on the choices they make as consumers, found “consumer electronics spending appears set to take a huge hit going forward.”

The report said 33 percent of respondents said they plan on spending less on consumer electronics over the next 90 days while only 19 percent said they’ll spend more. The group said these numbers represent a 10-point decline since January and “the weakest outlook for electronics spending ever recorded in an Alliance survey.”

In contrast, market research firm BIGresearch expects things to start turning around. The March version of the firm’s monthly Consumer Intentions & Actions Survey, which monitors more than 8,000 consumers, said it found consumer purchase intentions were on the rise from February for computer, home appliances, DVD/VCR, digital cameras and other categories. Just last month it said that purchase intentions were down for the same categories compared to January and the year-ago period.

Specifically, BIGresearch’s February report said, “Consumers aren’t as likely to be purchasing high-dollar durables in the next six months,” and that TV demand was flat from January and up from February 2007. But this month’s respondents appear to have changed their tune. The report said, “More than one in 10 (11.4 percent) contend they’ll buy a new TV in the next six months, up from last month (10.6 percent) and last year (9.0 percent).” The firm said this month’s numbers were its highest to date. BIGresearch suggested anticipation for the government’s stimulus checks may be responsible for the uptick in TV purchase intentions it found among consumers.

Not everyone is as optimistic. In a recent research note in which he downgraded his recommendation for Best Buy, analyst David Strasser of Banc of America Securities said he expects TV sales to be “flat to negative” this year.

“From an industry standpoint, many factors that drove [Best Buy’s] ’07 out-performance will reverse in 2008,” he said.

Strasser said he anticipates oversupply in the TV market in the second half of 2008, similar to the situation that existed in 2006, “driven by lackluster demand as slowing big ticket purchases will be exacerbated by an overly optimistic production schedule from the manufacturers.”

He explained, “Last year, we were bullish on TV demand as 1080p and a mix shift to larger screen sizes drove ASPs higher. This year, we do not see a new TV technology to catalyze sales.”

Strasser also introduced the possibility that the struggling Circuit City’s “need for relevance could cause a turbulent promotional environment this year.”