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Report: Price Cuts Undermine CE Recovery

7 Jul, 2009 By: Erik Gruenwedel

Despite a 4.2% increase from the first quarter to $71.1 billion in worldwide consumer electronics equipment revenue in the second quarter, overall 2009 CE sales will fall 8.2%, according to a new report.


El Segundo, Calif.-based iSuppli said the quarterly improvement, which represents a strong rebound from the 25.8% revenue plunge in the first quarter from 2008’s fourth, was aided in part by aggressive pricing on popular CE items such as digital cameras, video game hardware and LCD televisions.


“Following the dismal first quarter, conditions are starting to improve in the consumer electronics business,” said Sheri Greenspan, senior analyst, consumer electronics, for iSuppli. “Revenue will continue increasing on a sequential basis in the third and fourth quarters, rising by 12.5% and 10.2%, respectively. While this growth is encouraging, 2009 will still be a down year for the industry.”


The research company predicts global consumer electronics equipment revenue will decline to $307.6 billion in 2009, down 8.2% from $335.2 billion in 2008, due to the impact of the worldwide economic downturn as well as sharply declining prices for key products.

The recession caused revenue to decline 10% in the first quarter, compared to the same period in 2008, and drop 11.3% in the second quarter, compared to the second quarter of 2008. Revenue will decline by 8% and 4.2% in the third and fourth quarters, respectively, on an annual basis, according to the report.


Greenspan said the price have positively affected unit shipments, which are set to rise sequentially by 5%, 16.1% and 14.1% in the second, third and fourth quarters, respectively. However, following a 29.9% freefall in the first quarter, the sequential increases won’t be enough to prevent a 4.8% unit shipment decline for all of 2009.

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