Rabu, 23 Juli 2008

SAN FRANCISCO (Reuters) - Fears that belt-tightening U.S. consumers will bruise third-quarter earnings for makers of MP3 players, cell phones and other gadgets, pummeled the stocks of consumer electronics companies like Apple Inc (AAPL.O) and SanDisk Corp (SNDK.O) on Tuesday, a day after they issued grim forecasts.

Apple gave a lower-than-expected third-quarter outlook on Monday, but said wider economic woes have not directly affected its results. Still, Apple shares fell 2.6 percent to 162.02 on Nasdaq on Tuesday as several analysts cut their price targets on the stock. The stock fell as low as 146.53 during trading.

SanDisk, which makes flash memory for digital cameras and other devices, posted a second-quarter loss and lowered its revenue forecast on Monday, sending its shares down 24 percent to 13.62 Tuesday on Nasdaq.

On Monday, SanDisk Chief Executive Eli Harari blamed the poor results on "the rapid deterioration in consumer confidence," which hurt sales to U.S. retail customers and cell-phone makers.

Analog chip maker Texas Instruments Inc (TXN.N) also cut its revenue forecast on Monday, citing slowing demand for its products, which are integral components of gadgets like mobile phones.

Global Crown Capital analyst David Wu said that with TIs distributors apparently seeing normal sales to their customers, its weaker-than-expected outlook did not give any new insight into demand for consumer electronics.

But Wu said the back-to-school and year-end holiday shopping seasons -- typically strong sales months for consumer companies -- could see weakness in the United States due to high gasoline prices and consumer jitters about the economy.

"Consumer electronics is probably going to be tough in the U.S., but theres a big world out there," Wu said.

Several analysts said the ongoing economic slump, which is likely to further curb consumer appetite, presents a risk to the companies because retail sales are a big driver of their revenue.

Although consumers are tightening the grip on their wallets, which is "definitely a concern, with the tightening credit environment and rising commodity costs," some companies, such as Apple, will do better than others, said American Technology Research analyst Shaw Wu.

Wu said he still sees strong demand for pricey Apple products, such as the iPhone and iPod, because lower-income consumers are far likelier to cut back on discretionary spending than the wealthier users of iPhones and iPods.

But even for Apple, revenue "could be light of high expectations," Wu said.

Danielle Levitas, senior analyst at market research firm IDC Group, said she did not expect the second half of the year to be a "washout."

But Levitas said profits are likely to be softer than expected for consumer electronics companies as consumers curtail spending, especially on travel, vacations and expensive gifts.

"Its not that consumers wont be buying at all. Its that consumers are going to look for bargains."

For instance, someone may stick to a plan to buy a digital camera, but hold off buying a sophisticated model, Levitas said.

She expects sales of notebook personal computers and home entertainment devices to remain resilient. "When people arent eating out or going out as much, home entertainment is more important than ever."

U.S. sales of personal computers were sluggish in the second quarter and demand could remain depressed in coming months if the economic situation doesnt improve, IDC and Gartner, another research firm, warned in surveys last week.

But companies with strong international sales will have a cushion against poor domestic revenue growth, analysts said.

"The signs are that the economy is slowing for the consumer in the U.S., and companies with a strong revenue presence overseas are doing better than the U.S.-centric ones," said Charter Equity Research analyst John Dryden.

(Additional reporting by Sinead Carew in New York; editing by Jeffrey Benkoe, Phil Berlowitz)


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