Billy would one of you guys please send some info to these guys,
You have better info than me. Can u believe they used Circuit City?
Straight from the Street
Little Juice From DVDs
Off The Record Research has found that digital versatile disc
players aren't yet setting consumer-electronic gift sales afire, in this
second installment of the Straight from the Street reports.
By OTA ú Off The Record Research
The consumer-electronics category has the ability to light up the
fourth quarter for retailers -- that is, if the industry has the right
products at the right time. In past years, typical must-have
products have included VCRs, camcorders and CD players.
To see if the 1997 holiday season will be one of those special
years, Off The Record Research interviewed 36
consumer-electronics store managers and suppliers around the
country to find out what gadgets consumers are buying this year.
Specific questions focused on popular products and stores,
overall sales levels, ordering plans, and general acceptance of
Digital Versatile Disc players (DVDs), which are considered to be
as superior to VCRs as CDs are to audio cassettes.
DVDs: Their time has not yet come
According to OTR's sources, 1998 --
not 1997 -- will be the big year for
DVDs, whose high-quality digital video
represents the next generation in home
entertainment. While consumers
appear impressed with the price and
quality of DVD technology, these
sources explained, so far they're not
actively seeking it out. As one store
manager put it: "DVD players are doing
well, but they are not reaching the
mass-merchandise market yet. It's like
the VCR market 10 years ago."
Added another: "I still get a lot more
people adding a second or third VCR
to the house rather than buying the
DVD technology at this point. I think
next year may be the breakthrough
year for DVD players." In that last
point, he echoed other store managers
and suppliers who said that
improvement in DVD demand could
pump new life into the entire
consumer-electronics industry over the
next six to 12 months.
Meanwhile, OTR's sources said the
two low-end DVD players made by
General Electric's (GE) RCA and
Matsushita's (MC) Panasonic, priced
at $499, are the most popular.
History
Earnings Estimates
Financial Comparison
Industry Comparison
Overview
Earnings Estimates
Financial Comparison
Financial Statements
What's hot and what's not
Among other consumer electronics
products, only a few categories are sales
standouts this year. These are the usual
suspects for this time of year: Camcorders,
VCRs, wireless phones and televisions --
particularly large-screen models in the
$700-$800 price range. Popular brands for
televisions include Matsushita's JVC and
Panasonic, and Sony (SNE), which OTR's
sources singled out for their pricing, features
and name recognition.
Computer sales are mixed, with indications
that under-$1,000 models may be moving
more slowly than expected. For more on this
category, check back this Friday, Dec. 19,
for OTR's marketplace results on the PC and
modem industries.
Although home satellite-dish systems aren't
selling like hotcakes, sales of these items
are meeting sources' expectations. RCA's
dish (priced at $299) is selling better than
most. As one manager explained: "People
like the RCA dish because you can hook
more than one TV to it."
As for overall sales, OTR's sources said
business is meeting -- but not exceeding --
expectations. Store managers said there
has been no major increase in traffic
compared with last holiday season, despite
more lower-priced computer packages and a
few products featuring new technologies. As
one store manager observed: "Sales have
been OK, but not as high as we'd hoped."
How the retailers are faring
For now, so-so sales translate into neutral
news for Circuit City (CC) and Good Guys
(GGUY). OTR's sources estimated that
sales at these chains are flat to 5% higher
compared to last year at this time, with
Circuit City doing slightly better than Good
Guys.
Looking forward, these companies should
benefit from expected industry growth as
new products and technologies catch on.
Circuit City, in particular, may benefit from
its renewed emphasis on customer service
this year. In addition, Circuit City was
named most often as gaining market share
from Best Buy (BBY), small regional
chains and department stores, due to
Circuit City's name recognition, product
selection and one-on-one customer
interaction. As for Good Guys, stepped-up
advertising is expected to bring in
customers.
History
Earnings Estimates
Financial Comparison
History
Earnings Estimates
Financial Comparison
OTA ú Off The Record Research and Investor
Previously available only to institutional investors, OTA ú Off The
Record Research is the San Francisco-based research division of
OTA Ltd. Partnership, a securities firm in New York. It specializes in
providing its customers with systematic marketplace checks
through an established network of more than 5,000 global contacts.
The company provides investors with unbiased interviews of the
competitors, suppliers, distributors and customers of publicly-held
companies in over 30 industries. This information can be used in
discovering new investment opportunities, to confirm or refute Wall
Street's opinions, or to help decide when to sell a stock.
"Straight from the Street" is written by Brian Cooke, a senior editor
at OTR who has worked as a market research editor and reporter
since 1989.
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READ THIS c 1997 OTA Limited Partnership. All rights reserved. This report was produced
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may not be reproduced or relied upon, in whole or in part, without OTA's written consent.
The information herein is not intended to be a complete analysis of every material fact
respecting any company or industry discussed. OTA and/or its principals, employees, clients
or researchers may have an interest in the securities of issuers discussed herein or in
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