At its National Convention in Las Vegas recently, the Consumer Electronics Association reported a big jump in expected fourth quarter earnings, helped, in part, by the September 11 terrorist attacks. Shifting consumer tastes helped boost sales.
A dismal year-end for the travel and apparel industry was better than expected for high technology companies. The Consumer Electronics Association says that a shift in attitudes helped stop a fourth-quarter slide.
Before the events of September 11, the Association predicted a five percent decrease in sales. When year-end sales were tabulated, the decline only amounted to two percent.
Sean Wargo is an economist with the Association. He said that the terrorist attacks of September 11 changed perceptions of items such as cell phones and DVD players. "So, whereas these devices before were looked at as luxuries, now they're looked at more as necessities," he said. "What that has done is really helped stimulate the consumer electronics industry. And we saw a very strong fourth quarter. Whereas we were looking at a five percent decrease from the year before, we ended up only two percent down from 2001."
Bob Scaglione is the vice-president of marketing for Sharp Electronics. He agreeed with the association's assessment. He said priorities have shifted and the decreases in other industries, such as travel, have kept more people at home. This has created an unexpected need for electronic items such as DVDs that families use together. "We've obviously saw some downturn, maybe (the) following few weeks after September 11." he said. "But, since then, consumers tended to cocoon a little more. They tended to want stay home. They wanted to be together, maybe taking less vacations so they're looking for entertainment other than travel. A lot of people unfortunately were afraid to travel for a while and maybe had some expendable income that they could use for consumer electronics products. They wanted to be together and products that do bring families together to watch movies or to watch television or listen to audio although there was a little bit of a downturn in the beginning, fourth quarter sales for Sharp were actually quite strong."
Sales of cellular phones were also above expectations. The association feels that consumers now look on wireless communications as an important way of staying in touch with family members.
James Daurio is Vice-President of Sales for AudioVox, a major producer of cell phones. Mr. Daurio told us he does not think that sales have seen any major changes, but he feels the September 11 attacks have made people realize the versatility of cellular products. "It hasn't effected sales necessarily in a great way," he said. "But, I think it's really affected the awareness of people of what wireless phones can do for them. The situations of people calling from buildings or emergency situations whether it's on planes or on the ground, just made them realize that it help people that were in touch in those situations. And I think the awareness of wireless communications is broadening because of that."
Mr. Daurio says that the renewed focus on communications and entertainment products will most likely make people upgrade or replace their phones sooner than planned.
Declining prices for many consumer electronics also helped slow the expected decrease. Sales of consumer electronics in 2001 amounted to over $93 billion and they are expected to rise to $95 billion in 2002.