UPDATE: Prices For LCD TVs Continue To Fall, Hurting Industry
December 27 2011 - 4:08PM
Dow Jones News
For the first time, the average price of a 47-inch flat-panel
television is less than $1,000, good news for consumers but the
latest sign of tough times for the TV industry.
The psychologically important sub-$1,000 mark--based on a
forecast by market researcher NPD DisplaySearch--signals larger
screen sizes are becoming affordable to more Americans as a glut of
sets and components erodes prices.
But such a slump bodes poorly for the profits of set
manufacturers, as well as companies such as Corning Inc. (GLW), the
largest supplier of liquid-crystal-display glass for TVs, and Best
Buy Co. (BBY), the largest consumer electronics chain by
revenue.
Prices for the 46- to 47-inch screen size, the largest before
"big-screen" models of 50 inches or more, are expected to average
$940 in 2011, down from $1,020 last year, said Paul Gagnon,
DisplaySearch's director of North American TV research.
"We've got these large screen sizes like 40-inch and 46-inch
size class products that are relatively affordable," Gagnon said.
"It's really starting to drive a lot of upgrades."
The low prices reflect slower-than-expected demand and excess
production capacity, the research and consulting firm said.
DisplaySearch said it expects price erosion to be less significant
in 2012.
The pricing woes have reverberated through the television supply
chain, leading to losses at LCD panel makers such as LG Display Co.
(034220.SE) and recent plans by Sony Corp. (SNE, 6758.TO) to slash
costs at its money-losing TV operation.
Corning last month slashed its fourth-quarter profit estimates,
saying LCD glass prices had fallen farther than expected and that a
major South Korean customer backed out of part of a sales contract.
Corning said its TV display business had never seen a customer
renege on part of an LCD order.
Retailers have also been burned by lower prices, though Best Buy
reported earlier this month TV sales declines at a slower pace in
the company's fiscal third quarter than in previous periods.
TV makers have introduced new technologies--such as LED
backlights, higher frame rates and 3-D--to bolster demand, but
price-sensitive consumers, especially in North America, seem
reluctant to pay higher costs for premium features, NPD
DisplaySearch said.
In many cases, consumers are opting to trade up in size, rather
than features, for a similar amount of money, DisplaySearch
said.
Overall, 2.4 million 3-D units were sold in North America,
making up 8% of units. The premium for the feature on an average
55-inch set has dropped to about 17% from 33% in the third quarter
of 2011, but its adoption is still slower than anticipated. LED
backlights carry premiums of 25% to 30%.
-By Matt Jarzemsky and Ben Fox Rubin, Dow Jones Newswires;
212-416-2240; matthew.jarzemsky@dowjones.com
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