CNN/Money 
graphic
News > International
graphic
Sony finds TV world is flat
No. 1 TV maker is struggling to play catch-up in fast-growing flat-screen TV sales.
October 28, 2003: 7:44 AM EST
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Sony Corp. finds itself in an unusual position with the nation's hottest-selling new TVs -- playing catch up.

The leader in traditional cathode ray tube, or CRT, television sets is badly trailing the market in the liquid crystal display, or LCD, flat-screen televisions.

While Sony (SNE: Research, Estimates) is leader in the larger and more expensive plasma flat-screen televisions, it still has only a modest three-model offering and a fifth-place market share (with only about 5 percent of the market) for the more popular and lower-priced LCD televisions, according to consumer research firm NPD. It has only a narrow lead in the projection big-screen televisions as well.

Some analysts say Sony's problems with flat-screen televisions are just the latest sign that it has lost the edge that used to guarantee it both premium pricing and dominant market share across a line of consumer products. The company also is lagging in other hot product areas such as MP3 players, recordable DVD players and in-vehicle entertainment systems.

"They've relied too long on their brand name to carry their premium pricing," said Paul O'Donovan, principal analyst with Gartner. "They're having to do internally a lot of reorganization. They're very worried about Samsung because it's building up a brand reputation for innovation and quality that Sony used to have, and doing it cheaper."

Sony announced an agreement Tuesday with its Korean competitor Samsung under which Samsung willl supply the LCD screens to be used in Sony televisions. It also announced plans to cut 20,000 jobs, or 13 percent of its global work force of 154,500, over the next three years. The cuts will trim its fixed costs by about $3 billion by 2006.

YOUR E-MAIL ALERTS
Sony
Samsung
Electronics
Layoffs and Downsizing

Its fiscal second-quarter earnings released last Thursday showed some unexpected strength in its consumer electronics area, but were still well off year-earlier results, and the company cut its operating profit forecast by 23 percent for the current fiscal year that runs through March 31. For the second quarter it reported net profit totaled ¥32.93 billion, or $302 million, down from a net profit of ¥44.05 billion in the same period a year earlier.

Sony said operating profits at its electronics division rose 36.2 percent to ¥35.8 billion, helped in part by strong demand for components used in camera-equipped mobile phones and a positive impact from a weak yen against the euro. Chief Financial Officer Takao Yuhara said Sony expected annual sales of electronics to rise "five or six" percent after falling 5.6 percent in the six months to Sept. 30, and a 6.5 percent sales drop last year.

Overall revenue rose to ¥1.80 trillion from ¥1.79 trillion.

Flat screens hottest part of market

Sony has problems other than just consumer electronics. Results from its PlayStation 2 game console slackened and its film division has been on a losing streak. The film division suffered a blow with the box-office and critical failure of "Gigli," the movie starring Ben Affleck and Jennifer Lopez. But analysts say that its the rocky performance in consumer electronics, particularly televisions, demands the most attention.

The problem for CRT televisions, which still accounted for 85 percent of TVs sold in the United States through August this year, account for only 47 percent of the sales as measured by revenue, according to NPD. Both numbers are expected to continue to decline.

Meanwhile, flat-screen TV sales revenue has more than doubled to 11 percent so far this year from 5 percent a year earlier, despite double-digit declines in many models' pricing due to greater production efficiencies.

Sony executives insist the company is well positioned to resume its traditional leadership position in the LCD television market. It plans to offer four new LCD models in the U.S. market before Christmas.

"I don't think we miscalculated the market," said Earl Martin, Sony's marketing manager for advance TV products in the United States. "I think its perfect timing, hitting the market as it is exploding, offering different products."

And some analysts say it's much too soon to write Sony off in terms of flat screens or the other product lines in which it finds itself trailing.

"They come from nothing to 5 percent of [LCD] market in one year. That to me is very successful," said Tom Edwards, NPD's analyst for consumer technology. "They have the broad based distribution network they need and the brand sells itself. I think they could be in No. 1 position as soon as next year if they have the availability of product."

But other analysts say Sony faces struggles in television that it hasn't seen in years due to the changing nature, and competition, in the market. Bob O'Donnell, director of personal technology for research firm IDC, says that both computer makers and some companies out of the TV business for many years, such as Westinghouse and Motorola, are poised to bring more competition to the segment than Sony has seen in the traditional television business.

"It's not too late for Sony. But it's a wide open field," O'Donnell said.  Top of page


Reuters contributed to this report




  More on NEWS
JPMorgan dramatically slashes Tesla's stock price forecast
Greece is finally done with its epic bailout binge
Europe is preparing another crackdown on Big Tech
  TODAY'S TOP STORIES
7 things to know before the bell
SoftBank and Toyota want driverless cars to change the world
Aston Martin falls 5% in its London IPO




graphic graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.