Consumer electronics disaster ahead, analyst predicts
Posted
Mar 13 2008, 02:02 PM
by
Kim Peterson
Rating:
Jonathan Goldberg seems like a glass-half-empty kinda guy. The Deutsche Bank analyst has been checking in with retailers for weeks about consumer electronics sales, and many companies told him they "have yet to see an impact" in earnings from any economic slowdown.
Sounds great, right? Nope, Goldberg interprets that to mean the worst is yet to come. "The increase in gas prices and difficulties in home financing will have to reduce consumer spending, and as this becomes apparent to companies we will face a round of missed quarters and lowered guidance," he wrote in a note to investors.
Goldberg cut price targets today on four companies: GPS device maker Garmin, wireless chipmaker Atheros, wireless networking hardware maker Netgear and mobile content maker Glu Mobile. Shares of all four companies are down today, and Glu Mobile seeing the worst drop of nearly 9%.
Glu is going to have a tough time, Goldberg says, because it's getting more expensive to license content for mobile devices. Game companies are asking for as much as $2 million plus royalties for placing a version of their hit games on cell phones.
If consumer electronics sales are headed for bust, I wonder why more analysts aren't being pessimistic about one of the ultimate consumer electronics companies: Apple. Our chart shows that 11 analysts rate Apple a strong buy, and five rate it a moderate buy. No one is advising to sell.
At any rate, the retailers seem to be happy about how the economy is going. Are they missing the big picture here? Is the consumer electronics space in danger?
Disclosures: I don't own shares of any companies mentioned in this
post. And while Microsoft owns this blog, Microsoft does not control,
censor or otherwise have any editorial influence over what I write.
