SAN FRANCISCO (CNN/Money) -
The tryptophan wore off fast enough last weekend to get consumers into stores and spending -- in some cases at a record clip. It's too early to tell if consumer spending will continue apace for the rest of the season, but technology companies courting the consumer market -- and the retailers that sell their products -- are encouraged, and for good reason.
"This weekend looked pretty jolly," says Roger Kay, an analyst who tracks the PC market for IDC. "Consumers are out in force."
Analysts point to two reasons for the stronger-than-expected initial sales numbers. First, the season is as short as it can be, with just 26 days between Thanksgiving and Christmas.
Second, according to Scott Hoyt, director of consumer economics for Economy.com, mortgage refinancing applications reached a record high in late September and early October. Assuming it'll take 60 days to close those deals, the trend should put much-needed cash in consumers' hands just in time for the holidays.
According to ComScore Networks, an online sales tracking company, sales of consumer electronics shot up 36 percent on Thanksgiving and "Black Friday," compared with the same time frame last year.
Offline, the results are also promising. Retail sales Friday were an estimated $7.4 billion, a 12 percent increase over last year, according to ShopperTrak RCT, a retail tracking firm. Saturday saw $5.2 billion in sales, a 9 percent increase, year-over-year.
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So what products will lead the way for the technology industry? And, since companies have been so cautious with sales forecasts, can the inventory channels support a surprisingly strong season?
On the consumer front, DVDs players, digital cameras, and MP3 players have rocketed out of the gate, in part due to the relative newness of the products and the deep discounts that are available.
According to the Consumer Electronics Association, 40 percent of U.S. households now have DVD players -- growing fast, but still nowhere near the 90 percent share that VCRs maintain. Some retailers are offering basic DVD players for $48 after rebate, and Kmart's (KM: Research, Estimates) best-selling electronics product is the Sylvania all-in-one TV/VCR/DVD.
According to Rob Enderle, a computer analyst with Giga Research, Creative Lab's MP3 player and Microsoft's (MSFT: Research, Estimates) Xbox are also early strong sellers.
On the PC side, companies such as Dell (DELL: Research, Estimates), Hewlett-Packard (HPQ: Research, Estimates), Sony (SNE: Research, Estimates), and Emachines are expected to do reasonably well this season, thanks to deep discounts on low-end products. Emachines, for example, is offering a $400 rebate on a $1,200 Windows machine. But some feel the PC industry will see only moderate growth this season, compared with the consumer electronics sector.
Ironically, if consumer spending maintains the post-Thanksgiving pace, some technology companies could be caught flatfooted.
"Companies didn't build a lot of inventory. Everyone based their build numbers on crappy consumer-confidence numbers," says Giga's Enderle. "For certain high-demand products, companies are going to run out."
Enderle says this won't affect companies such as Dell and Gateway (GTW: Research, Estimates) as much as it will firms like H-P, since the formers' reliance on build-to-order means they can react more quickly to booming demand.
True, the analysts like what the early returns could portend for consumer technology companies. But they also warn against assuming that this great first weekend means the rest of the season will follow suit.
As Hoyt from Economy.com explains, "The last week or two of the season can make or break it."
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