In yesterday’s Display Daily, we noted that CEA sees no recession in consumer electronics with 2008 sales topping $173B, up $2B from their previous forecast. But many of these CE companies issued quarterly earnings reports this week and the news is not as rosy on this front — at least not for some.

Chris Chinnock
Senior Analyst and Editor
for Insight Media

Most notable on the downside was Sony’s bigger-than-expected 47% fall in quarterly profits. This was driven largely by troubles with Sony Ericsson in mobile handsets, said the company. The company is still profitable (US$325M for the quarter), but troubles were most apparent in cell phones, cameras and PCs, as well as its movie division. Total sales rose only 0.1% for the quarter and full year profit forecasts were lowered.

Sony did manage to improve profitability on LCD TVs, but sales were lower due to weak demand from China. The gaming division is turning around too and moved into the black due to lower manufacturing costs for the PlayStation 3 and higher sales of PS3 games.

Most notable on the upside was Panasonic’s near doubling of profits, driven by TV sales, and Samsung’s 51% income gain, its biggest jump in four years. Panasonic (Matsushita) reported an 86% rise in quarterly net profit to a record US$680M and maintained its full year profit forecast. The company saw its LCD TV sales jump 68% in revenue terms in April-June, while plasma TV sales grew 16%. Mobile handset sales were brisk too.

Meanwhile, second-quarter net income at Samsung Electronics rose 51% to US$2.1 billion Year-over-Year (YoY), with total sales increasing 24%. Amazingly, this performance was below expectations, and analysts are worried about slowing sales and profits for the remainder of the year. The bright spot at Samsung was LCD sales, which rose 41.0% to US$4.6 billion YoY, with profits rising 2% on lower operating costs.

Interestingly, Samsung SDI, the division that makes the OLED, PDP, small LCD and CRT displays, is going through a reorganization. Today, those displays account for 75% of the anticipated 2008 revenues, but will represent only 25% by 2013. What will account for the majority of income? Batteries.

SDI’s money-loosing PDP operations will move under Samsung electronics to support TV operation and the OLED production will be shifted to Samsung Mobile Display Co. a 50-50 joint venture with Samsung Electronics set for 2009.

JVC made progress in the second quarter too. It is not yet profitable, but it did halve its net loss to US$64M. Revenue was down 16.5%, but better control of operational expense helped quite a bit. The CE section finally turned black for the company too. JVC plans to complete its merger with Kenwood on Oct. 1.

Toshiba said it booked a net loss of US$110M in Q2, about half what it earned a year earlier. It blamed semiconductor operations, a similar concern at Samsung, for the poor results. Nevertheless, it left it’s full year earning forecast unchanged.

In projection, InFocus lost $3.8M in Q2 compared to a loss of $7.8M in the same quarter in 2007, but margins were up slightly YoY. While the performance did not meet the company’s expectations, it did manage to increase revenue in all regions by 19% overall compared to Q1, helped by the introduction of three new platforms.

While this is not a complete picture of the health of display and CE companies, it is probably a decent bellwether. Some companies are doing better than others, but the laggards are making progress, or at least taking steps to turn things around. If consumer electronics spending holds up as CEA thinks, then the rest of the year might be pretty good for most of the players above. But that’s a mighty big if.