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TV price war in the picture for the holidays

TOKYO — TVs are about to get cheaper.

Sony gave up last week on a goal to profit from televisions this fiscal year and Panasonic forecast that price drops will deepen this quarter. Earlier, Samsung Electronics predicted "severe" competition for the year-end season, echoing comments from LG Electronics.

Projections from the world's four largest TV makers signal the industry will fail to capitalize on the biggest sales quarter of the year, with some analysts predicting prices to fall as much as 25 percent in 2010. Companies from Microsoft to Intel are increasingly counting on corporate demand as consumers are reluctant to shop.

"There's going to be a price war this Christmas season and there's no way around that," said Tsutomu Yamada, a market analyst in Tokyo. "The whole strategy this year is 'sell earlier and sell for less.'

"That makes life miserable for the manufacturers."

TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20 to 25 percent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore. That bet hasn't materialized, as pessimism has increased recently and U.S. shoppers aren't willing to pay extra for higher-quality sets.

"Consumers are saying, 'I like the product but I don't want to pay a 30 percent premium to the other one. I'll wait," Goyal said.

Retailers such as Target and Wal-Mart are sweetening discounts ahead of the holiday season to move merchandise as joblessness hovers near a 26-year high. Target, the second-biggest discount retailer behind Wal-Mart, said in October that it would lower prices on more than 1,000 toys to attract shoppers. Wal-Mart responded with its own discounts.

Sony chief financial officer Masaru Kato said the maker of Bravia TVs is forecasting a loss from the business this fiscal year and the company is bracing for "harsh" competition. Sales of 3-D sets, projected to account for 10 percent of the 25 million annual TV target, are trailing Sony's previous expectations, he said.

While Tokyo-based Sony raised its full-year net income forecast 17 percent to $867 million Friday, the world's third-largest TV maker attributed the increase to better-than-expected earnings from games and computers during the quarter ended Sept. 30 and said it's "cautious" on the outlook for the rest of the year.

Full-year profit at Sony's main electronics unit that makes TVs will be lower than anticipated in July, the company said today, without specifying numbers.

Panasonic, the world's biggest maker of plasma TVs, said falling prices, the stronger yen and more expensive raw materials prevented the maker of Viera TVs from raising its full-year profit forecast even though earnings during the first half exceeded the company's projections.

South Korea's Samsung and LG, the world's two biggest TV makers, have voiced similar concerns after the advantage of having a weaker won, the worst-performing major Asian currency during from April to June, dissipated. The won's 5.3 percent gain against the dollar since September makes it the region's best performer during the period.

Fourth-quarter prices of LG sets will probably fall as much as 8 percent from the preceding quarter, as TV makers clear mounting inventory, chief financial officer David Jung said.

TV price war in the picture for the holidays 11/01/10 [Last modified: Monday, November 1, 2010 9:28pm]
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