It has been exactly two weeks since Black Friday, and profitability has been a distinctly mixed bag. Some TV makers, sitting as they do in the middle of the supply chain, have reason to be hopeful, while panel makers and retailers have seen profits sag despite burgeoning unit sales.

Ken Tompkins
Insight Media Analyst

Despite the surplus capacity that is restraining their ability to maintain high margins, strong brand names, such as Sony, will benefit from the higher unit sales resulting from the current buyers market in LCD-TVs.  Sony’s senior general manager for flat-panel television, Takashi Fukuda, told Reuters that holiday unit sales have been brisk amid falling prices. 

While Sony is not exempt from the deteriorating profitability that besets much of the industry, the brand expects to benefit from higher-margin products, such as LCD-TVs with higher resolutions and larger diagonals.  By introducing new LCD-TVs featuring more desirable attributes, Sony expects dollar sales to increase by 75% in the coming business year, even though it believes unit sales will increase by a relatively modest 37%.   

This optimism for ‘07 persists even as Sony took some lumps in 3Q.  Samsung’s “Bordeaux” line of LCD-TVs achieved over two million in unit sales since its inception - one million of them since September.  These and other Samsung milestones helped Samsung beat Sony in 3Q’06 revenue; Samsung’s earnings share topped 15% of the global LCD-TV market in 3Q.

Although Samsung’s results were impressive for a relatively new global television brand, Sony expects its greater momentum in LCD-TV unit sales will enable the brand to ship between 10 and 11 million sets next year.

We expect Sony to achieve, at the very least, its broad goal of LCD-TV’s revenue growth outstripping the growth in unit shipments.  We base our optimism in part on Sony’s recent history in LCD-TV.  Sony had the third highest unit share in 4Q’05, behind Samsung, Sharp and Philips, while its revenue share was second only to Samsung’s.  And remember, Sony was a late-comer to the LCD-TV market.