Weaknesses In Palm, Sony, Panasonic, Apple

We are now in the slowest period of the year for Consumer Electronics sales. Also the Chinese New Year (January 26, “Year of the Ox”) is when all Asian production shuts down. The new product cycle starts with design wins in March for new products to be sold from Thanksgiving to Christmas. So, there will be very little product news until later this year.

The data for the December quarter is mixed. Chip producers are having a bad time. Desk top PCs are down nearly 20% in volume Y/Y. Laptops are in better shape as discussed by Apple when it released the first quarter results. Cell phones are having a dismal time except for the smart phone segment. Again Apple is leading the pack with a 32% (and growing) market share.

Visibility over the next 4 months is poor. We expect continued declines in consumer electronics sales. The Super Bowl boost for HDTV sales may not be significant this year.

OPPORTUNITIES

We currently have no Buy recommendations under coverage in this space.

WEAKNESSES

We continue to rate Palm Inc. (PALM) and Sony Corp. (SNE) as Sells. Our ratings are Hold for Panasonic (PC) and Apple Inc. (AAPL).

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