CEA Revises Holiday Forecast

The Consumer Electronics Association (CEA) today revised its projected industry growth for the fourth quarter of 2008 as new data shows the economy and consumer sentiment remain muted and CEA surveys show overall spending is down this holiday season.

After analyzing newly available data, including final October shipment and revenue data and a new survey of Black Friday shoppers, CEA now projects fourth quarter wholesale shipment revenues will increase by 0.1 percent over the same period in 2007. The original forecast, issued in October, anticipated 3.5 percent fourth quarter growth over 2007.

CEA’s earlier forecast was based on shipment data, consumer surveys and economic analysis available in early October. Flat-panel TV shipment revenues in September 2008, for example, were up 32 percent on unit volume and up eight percent on revenue over 2007. In October 2008, unit shipment growth of flat-panels remained high at 22 percent but shipment revenues fell to negative three percent, impacting the fourth quarter forecast. The revised holiday forecast also reflects new data indicating that holiday shoppers are opting for smaller, less expensive TVs and other CE products purchased at discount retailers.

Mobile phones and computers are also feeling the impact of the economy. Mobile phones will see five percent growth in the fourth quarter compared to last year, a projection revised downward from CEA’s 11 percent growth forecast issued in October. Consumers are holding off on upgrading their handsets while steeper than expected price declines are cutting into revenues. Greater than expected discounts on laptops and an increased interest in lower-priced netbooks are impacting the computer category, which is now projected to post a year-over-year revenue decline of two percent, down slightly from CEA’s earlier estimate of negative one percent growth.

“Although CEA certainly took price declines and weakness in consumer demand into consideration, the severity and the speed of declines in these unprecedented times caught everyone off guard. Consumer sentiment is improving, but shopper unease this holiday season is creating challenges for all sectors of the economy, including consumer electronics,” said Jason Oxman, CEA’s senior vice president of industry affairs. “We are now projecting essentially flat revenue for the fourth quarter, and we continue to project overall growth for 2008. We remain vigilant in analyzing all available data to ensure that our forecasts accurately account for changes in circumstance.”

Consumers are taking advantage of lower prices available from a variety of retail outlets. CEA’s Black Friday survey showed that roughly a third of adult consumers shopped between Black Friday and Cyber Monday. Consumer electronics (CE) remained a popular choice for a majority of shoppers. Fifty-four percent of consumers that shopped over the Black Friday weekend purchased a CE device during that period, making it the second most frequent purchase product behind clothing.

About CEA:
The Consumer Electronics Association (CEA) is the preeminent trade association promoting growth in the $173 billion U.S. consumer electronics industry. More than 2,200 companies enjoy the benefits of CEA membership, including legislative advocacy, market research, technical training and education, industry promotion and the fostering of business and strategic relationships. CEA also sponsors and manages the International CES — Where Entertainment, Technology and Business Converge. All profits from CES are reinvested into CEA’s industry services. Find CEA online at www.CE.org.