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Tuesday, November 07, 2006

Bleak Holiday Forecast Not What the Doctor Ordered

By William Trent CFA of Stock Market Beat

The closest we have come to making a holiday sales forecast is to say that we are worried about consumer spending. However, we are well aware that American consumers are resilient beasts, especially come holiday time. So we exercise the caution we believe is due but don’t make any big bets that there will be a big slowdown. Not so for some others, however:
Electronics Holiday Sales May Be Ho-Hum: Financial News - Yahoo! Finance
A fierce battle is brewing for consumer-electronics dollars this holiday season as two new video game consoles join the widening mix of TVs, cameras, portable music players, computers and cell phones.But some market watchers say the electronics industry could be running up against a season that’s more ho-hum than ho-ho.
Analysts predict revenues are slowing for several reasons: prices for a range of products, most notably flat-panel TVs, have dropped significantly; hits of previous years, such as digital cameras, are maturing; supplies of the new game systems are limited; and no other new blockbuster products seem to have emerged.
“I call it the storm before the storm,” Chris Crotty, a senior consumer electronics analyst at market researcher iSuppli Corp. said of the holiday quarter. “There is more competition. There are more products out there and it’s only going to get worse.”
All of that could translate to better bargains for consumers but less money for gadget makers.
That’s funny. It was only June that iSupply was forecasting strong holiday sales. We noted at the time:
The seasonal slowdown story doesn’t hold much water, because supposedly the Olympics and World Cup were going to drive unseasonably high demand for flat panel televisions this year. Hopes now rest on the fourth quarter holiday season, and fingers are crossed that the US consumer will carry the day.
But now the fingers may have been double-crossed. In addition to iSupply’s warning and mixed economic news from the consumer front, truckers have warned that holiday shipments to retailers are coming later than expected - if, that is, they come at all.
Photo: attack_the_tissue_paper6657, originally uploaded by doviende. The author may hold a position in the securities discussed. The author's current holdings are as follows: Long: Intuit (INTU) put options; Nasdaq 100 (QQQQ) put options; Bookham (BKHM; Ballard Power (BLDP); Syntax Brillian (BRLC); CMGI (CMGI); Genentech (DNA); Ion Media Networks (ION); Lion's Gate (LGF); Three Five Systems (TFS); Adobe Systems (ADBE) call options; Ceradyne (CRDN); IShares Japan (EWJ); StreetTracks Gold (GLD); Starbucks (SBUX); U.S. Oil Fund (USO); Plantronics (PLT) call options; Short: Lion's Gate (LGF) call options; Dell (DELL) put options; Ceradyne (CRDN) call options; Plantronics (PLT) put options;

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