TV makers brace for price war in US

TV makers are headed for a tough Christmas as a price war looms in America.

Sony says it has given up on a goal to profit from televisions this fiscal year, and Panasonic forecasts price drops will deepen this quarter.

Last week, Samsung Electronics predicted "severe" competition for the year-end season, echoing comments from LG Electronics a day earlier.

Projections from the world's four largest TV makers signal the industry will fail to capitalise on the biggest sales quarter of the year, with some analysts predicting price declines of as much as 25 per cent this year.

Companies from Microsoft to Intel are increasingly counting on corporate demand as consumers are reluctant to shop. "There's going to be a price war this Christmas season and there's no way around that," said Tsutomu Yamada, a market analyst at kabu.com Securities in Tokyo. "The whole strategy this year is 'sell earlier and sell for less'. That makes life miserable for the manufacturers."

TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20-25 per cent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore.

That bet hasn't materialised as pessimism has increased recently and shoppers in the US aren't willing to pay extra for higher-quality sets.

"Consumers are saying, 'I like the product but I don't want to pay a 30 per cent premium to the other one. I'll wait'," Goyal said.

"Prices will have to come down. That's a given."

US retailers such as Target and Wal-Mart Stores are sweetening discounts ahead of the holiday season to move merchandise as joblessness hovers near a 26-year high.

Target, the second-biggest discount retailer behind Wal-Mart, said this month it would lower prices on more than 1000 toys to attract shoppers.

Wal-Mart responded with its own discounts.

Sony chief financial officer Masaru Kato said the maker of Bravia TVs was forecasting a loss from the business this fiscal year.

Sales of 3D sets, projected to account for 10 per cent of the 25 million annual TV target, were trailing Sony's previous expectations, he said.

But Sony raised its full-year net income forecast 17 per cent to 70 billion yen ($1.13 billion).

It attributed the increase to better-than-expected earnings from games and computers during the quarter ended September 30 and said it was "cautious" on the outlook for the rest of the year.

- BLOOMBERG

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