Scott, Per our telephone conversation of yesterday, you mentioned that Andrew Watt of S&P contacted Zenith IR, several weeks ago, regarding the review of the S&P ratings. Why wasn't Andrew given a more complete story?
According to the chief spokesperson of the largest CE comapany in the US, Thomson (RCA, Proscan and GE brands), the outlook for the industry looks much improved in '98. Summary of Exec. Vp-COO James Meyer latest remarks on his company and the industry for 1998:
1.Early DTV sales could exceed industry's expectations for slow ramp-up, Meyer suggested. "How many are we going to sell? I don't know. But there's a dynamic in our country -- a lot of wealth has been created in the last 3 to 4 years," he said, citing sustained up-tick in luxury car sales as positive indicator of disposable income and consumer confidence in economy. "If digital TV becomes a status item, we could sell a lot more than expected."
2. On analog TV category basis, he said 27"-and-below "is in about as good a shape as it's been in many, many years." Company met goal of keeping tight inventory here, he said, and now has just one-week supply on hand. Meyer attributed lean inventory partly to booming tube sales to Brazil and China that took pressure off Indianapolis-based Thomson for U.S. sellthrough of finished sets. "In fact, our friends in the Tube Division have handed us a price increase," Meyer said.
3. Tube increase might mean TV price increase for 1998, Meyer said, noting that "inventories at retail are in very good shape" and predicting continued stability next year for core TV products. Like other industry executives, he raised possibility of TV shortages in near term owing to new-found planning discipline among dealers and manufacturers. "If Christmas is good, there isn't going to be any inventory, and I don't know how quickly we can build in the first quarter," Meyer said of smaller screen sizes.
4.Projection TV could suffer shortages, too, he said: "We could run out of projection in the first quarter. January's a big month for the category."
5. Inventories are tight, too, in 35-36" and 31-32" direct view, Meyer said.
6. With 2 weeks to go in holiday selling season Thomson was "sold out" of RCA Network Computer (NC) inventory, Meyer said. Web-surfing set-top " really exceeded our expectations," he said, although he conceded " quantities weren't mammoth -- about 50,000" since autumn launch.
7. Meyer contended that most probable effect of currency shifts might be lower prices for Asian-made key components.
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I don't know what Zenith IR told Andrew Watt but it certainly wasn't as bullish picture as painted by the Thomson COO.
Did Zenith IR mention:
1. The Americast contract for $1 billion worth of STBs is now just producing revenues and will gear up in March?
2. That Divx will be exclusively sold by Zenith in March or April?
3. That Zenith was introducing HDTV on January 8, 1998 and that a S&P credit re-evaluation should wait until after the CES in order to better understand the credit worthiness of Zenith?
(If HDTV takes off, like Meyer projects, ZE SHOULD BE UPGRADED SEVERAL NOTCHES BY S&P, not downgraded by one notch)
4. That TV demand is strong and prices are firming?
5. That Zenith soon will be introducing a NCTV very similar to the successfully launched, RCA brand?
6. That Zenith has a full production line of profitable 15" computer monitors?
7. That Zenith has a large cable-modem contract with 21st Century that is in production and one in Canada for Roadrunner?
8. That Zenith has a large STB contract with News Corp satellite subsidiary covering all of Latin America?
We need ZE buyers coming in at this time in order to come into the International CES looking strong. Whatever LGE and Zenith employees can do to help make this happen, it will be well rewarded down the road. Let' get the ENTIRE story out to Andrew and others and move on to VICTORY IN '98!!! |
