The US Government and Central Bank are doing everything they can to help reduce the economic impact of a pending recession. Congress recently passed a $168 economic stimulus package consistently mostly of tax rebates to millions of Americans. The Fed has been cutting interest rates at lightening speed.
In spite of recession concerns, floundering consumer confidence, stock trading uncertainty, and a sluggish holiday retail season, many TV makers are expecting strong growth during 2008. Sony (SNE) experience double-digit growth in the fourth quarter of 2007 in US electronics sales.
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The company credits flat panel television demand as the leading cause of its strong growth. Manufacturers are seeing strong demand partly from lowered prices offered by retailers. Consumers are moving quickly to pick up advanced plasma and flat panel technology and recently reduced prices at electronics retailers like Best Buy.
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Market researcher DisplaySearch expects global LCD television revenue to grow 27% to $82.7 billion this year. They also suggest plasma TV sales will grow 7% to $17 billion. TV makers seem like a good addition to a personal stock portfolio. Even with the strong growth potential, many fund managers and investors seem to be leaving these companies out of their current stock market portfolios.
In spite of strong expectations from manufacturers and many analysts, investors do not seem convinced. Sony shares have fallen about 20% since the end of December. Many other TV makers have seen stock trading drops as well. Sharp has dropped about 10% already this year.
Sony currently sits just above its 52 week low stock price around $43. A nice one year price target of $68.50, according to analysts, makes the company a great long-term stock trading strategy with potential for high returns on investment. Good news on the US economic front coupled with the industry’s growth expectations could offer the stock help in coming months. North America makes up roughly one third of global television sales.
Retail competition is helping drive down consumer prices on televisions, even those with advanced plasma and LCD technology. While retailers are lowering prices, demand for manufacturers to provide televisions is still high. Many consumers are taking advantage of lowered prices to upgrade to the new technology. Stable demand has caused some to rethink their investment strategy.
Investors are concerned that the falling dollar relative to the Japanese yen may have a negative impact on global sales. Recent stock market rules of thumb suggest as the US equity markets continue to fall, the low dollar to yen trend should continue. Japan hosts many of the strongest television makers. The potential sales problem lies in Japanese exportation of TVs to foreign markets.
When Japanese manufacturers export to the US and experience sales in US dollars, and then convert those sales back into Japanese currency, there is a negative sales result from the conversion. With a weak dollar, US sales do not convert as strongly back to the Yen. Expectations of a continued weak dollar suggest this challenge could be in play for a while.
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