December 4, 2008 / 10:30 PM / 11 years ago

Consumer electronics group cuts 4th-quarter view

SAN FRANCISCO (Reuters) - The Consumer Electronics Association lowered its fourth-quarter industry growth forecast on Thursday as consumer spending weakened and steep discounts cut into revenue.

The U.S.-based trade group now expects a scant 0.1 percent increase in wholesale shipment revenue in the period, compared with its previous forecast in October for 3.5 percent growth.

Shoppers are paying less for their TVs, mobile phones and computers, taking full advantage of the lower prices being offered by companies desperate to move their products.

Jason Oxman, CEA’s senior vice president of industry affairs, said the falloff in consumer spending and the price declines in late October and November were quick and severe.

“Unit volumes have held up in a lot of the larger categories and what we’ve seen is an acceleration of discounting beyond what we had originally projected.”

Televisions make up around one-quarter of the group’s forecast. Oxman said more customers are opting for screen sizes below 40 inches, cutting into revenue. Shipments of flat-panel TVs rose 22 percent in October, but revenue fell 3 percent.

In addition, big discounts on notebook computers and the continued popularity of low-cost netbooks is impacting overall revenue in the computer category, which is now expected to fall 2 percent from last year.

Meanwhile, consumers are holding on to their mobile phones longer than usual, rather than upgrading, Oxman said. CEA now expects 5 percent mobile phone fourth-quarter revenue growth, down from its forecast of 11 percent.

But some consumer electronics segments are showing resilience, Oxman said. Video games are still expected to see 5.6 percent fourth-quarter growth and the growth forecast for digital cameras and picture frames is unchanged at 6.9 percent. Meanwhile, GPS products are expected to grow a healthy 30 percent in the quarter.

The CEA has more than 2,200 member companies. It sponsors and manages the International CES trade show in Las Vegas in January.

Reporting by Gabriel Madway; Editing by Andre Grenon

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