Housing Downturn Catches Up With Corning

I have been contemplating buying a big screen TV to hook up with my hacked Apple TV that allows me to watch great international movies I download from the Jaman store. My current 32-inch Olevia is about to be retired and replaced by a newer, shiner version.

As part of my research, I have been spending a lot of time at Best Buy and Circuit City, comparing a vast array of TVs. The prices of really good TVs have tumbled. I was surprised how cheap the Sharp LCDs have become.

I shouldn’t be surprised. The sales of these fancy televisions are stagnating, mostly due to the ongoing economic crunch. The housing bubble kept people buying a whole lot of consumer gear to pimp out their pads. However, with money tight, now folks can’t pay for gadgets, much like they can’t afford their cribs. This has to be causing problems throughout the entire consumer products ecosystem, including television makers.

At the end of the food chain is Corning, a company that makes glass that goes towards making the LCDs that are in turn embedded into televisions sold by millions. The Corning, N.Y.-based company today lowered its financial forecast for the coming months. In a press release the company noted:

The company also revised its third-quarter gross margin expectation from at least 50% to about 47%. The guidance reductions are primarily related to lower-than-expected shipments of LCD glass in the company’s wholly owned display business….we now expect third-quarter sequential volume for Corning’s wholly owned display glass business to be down about 5% versus our previous guidance of flat to up 5%

CEO Wendell P. Weeks (one of the nicest guys I have met) noted, “We continue to see evidence of ongoing strength in the retail market for LCD TVs, a key growth area for the LCD glass industry. However, the supply chain correction, as outlined in our second-quarter conference call, is taking longer than we expected.”

I think it might take a lot longer than people think. We did an informal study of Craigslist listings for used LCD TVs in markets such as Phoenix, Sacramento and South Florida, which have been impacted negatively by the the housing crisis. You could pick up brand name LCD TVs between $260 and $1,000 depending on the size and quality of the screen. Now that’s seriously cheap!

I asked the guys from Pricegrabber to take a look at the LCD and Plasma TV pricing trends for this year and the results were pretty shocking: the price of such TVs is down from an average of $1,709 in January 2008 to $1,575 in August 2008. Those are disturbing trends and — like everyone else — Corning is in for a rocky ride.

The good news: I am going to actually get a really get a good bargain if I can postpone my buying decision for another month or so.

Photo courtesy respres via Flickr

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