News

The rumored economic recovery may not be simply spin and hype, if recent reports from the consumer electronics industry are any indication.

On January 28, Harman International Industries, Inc. announced record sales and earnings for its second fiscal quarter, ended December 31, 2003. The Washington, DC and Northridge, CA-based electronics firm posted a 24% increase in net sales for the quarter, a total of $691.6 million compared to $560.0 million during the same period last year. Net income was up more than twice that percentage—a 50% increase over the same period last year, $41.5 million vs $27.6 million.

Harman International is the largest US audio manufacturer, the parent company of the Harman/Kardon, JBL, Infinity, Lexicon, Mark Levinson, and Revel brands. For the six months ended December 31, Harman's net sales totaled $1.289 billion compared to $1.051 billion in the previous year, an increase of 23%. Net income for the six-month period rose by an astounding 64%, totaling $61.2 million compared to $37.4 million last year. Growth was clearly strongest at Harman's Consumer Systems Group, which reported net sales of $571.6 million for the second quarter, a 28% rise from last year's $447.9 million. By comparison, Harman's Professional Group net sales rose by a respectable but less spectacular 7%, totaling $120.0 million vs $112.1 million last year. During the record second quarter, Harman stockholders approved a two-for-one stock split. Harman has a strong presence in both the consumer and professional audio markets, one of a handful of companies that do.

Harman's Japanese competitors have also posted generally good results, buoyed by rapid growth in digital products.

Pioneer Corporation's group net profit rose 15% during its third fiscal quarter, ended December 31, with a total of ¥9.14 billion, ($86.5 trillion, as of February 1, 2004) up 15% from the profit of ¥7.96 billion during the same period the previous year. Group operating profit grew 41% to ¥16.78 billion ($158.8 trillion) from ¥11.88 billion, on a 7.6% rise in group revenue to ¥198.87 billion ($1.88 billion) from ¥184.87 billion. Pioneer's home electronics unit was a winner during the quarter, with operating profits up 39% to ¥4.82 billion ($45.62 million). Strong product niches were flat-panel plasma displays and DVD recorders. Pioneer also has a strong presence in mobile electronics, and enjoyed strong sales of car navigation systems.

Makers of finished products, of course, don't do well without benefiting parts suppliers. Japanese semiconductor makers (most of whom, like Sanyo, Toshiba, and Fujitsu, also produce finished goods) reported a strong third fiscal quarter.

On Friday, January 30, Sanyo Electric Co. posted a group net profit of ¥7.89 billion ($74.68 million) for the quarter ended December 31, a 68% increase from the year earlier: ¥29.09 billion ($275.3 million) from ¥17.33 billion. Revenue was up 14% to ¥653.44 billion ($6.534 billion) from ¥575.45 billion. Sanyo is a huge supplier of raw semiconductors as well as having a strong presence in the mobile-phone handsets and digital camera markets, although most of its cameras are sold under other brand names, such as Olympus. Sanyo's profits in A/V and information/communications gear rose 39% over the previous year. In that sector, profits for the quarter totaled ¥17.27 billion ($163.4 million) on a 24% rise in revenue to ¥324.66 billion ($3.073 billion).

Toshiba Corporation also posted some big gains, with a ¥14.03 billion ($132.3 million) consumer products group operating profit for the quarter, an astounding increase from the ¥2.43 billion reported a year earlier. Total sales reached ¥1.32 trillion ($124.9 billion), up only slightly from last year's ¥1.31 trillion. Like Sanyo, Toshiba is riding a surge in its semiconductor business, as well as in its LCD operations. However, a heavy tax burden and slow movement in the company's personal computer business resulted in a net loss of ¥9.25 billion ($87.56 million), deeper than its year-earlier loss of ¥6.9 billion.

Fujitsu's net profit reached ¥7.65 billion ($724.71 million) for the third quarter, an amazing reversal of last year's ¥24.91 billion loss. Operating profit hit ¥10.1 billion ($95.61 million) for the quarter, a reversal of the ¥13.1 billion loss a year earlier. Sales were up 5% to ¥1.07 trillion (10.129 billion). The company's chief financial officer, Masamichi Ogura, predicts a ¥150 billion ($14.19 million) operating profit for the fiscal year ending March 31. Fujitsu is a major supplier of semiconductors and computer parts, and is one of the world's primary sources for flat-panel plasma displays.

NEC also did well, with quarterly net profit at ¥11.1 billion ($105.07 million), up from a ¥4.5 billion loss a year earlier. Operating profits were ¥33.5 billion ($317.12 million) for the quarter, up from ¥23.2 billion a year earlier. Strong product categories included optical disk drives and mobile phones.

Manufacturers, of course, don't do any business without retailers. On December 31, Tweeter Home Entertainment Group, Inc. reported that for the first fiscal quarter ended December 31, total revenue increased 2% to $255 million from $250 million in the same period last year, although comparable store sales decreased 1%. Net income for the quarter was $5.1 million, compared to $5.2 million last year.

Tweeter, which operates upscale home-entertainment stores throughout most of the country, stated that it had experienced "greater sales of video products and lower sales of audio products" during the most recent quarter, "a continuation of a several quarter trend." The company's fiscal 2003 revenues totaled $787 million. Tweeter president and CEO Jeffrey Stone said, "We faired well compared to the industry. All forms of new technology television are driving top-line sales, including plasma, LCD, and DLP technologies. Flat-panel sales accounted for 19% of the quarter's revenue while DLP accounted for 8% of revenue." Tweeter executives have initiated new "supply chain and inventory management" methods that they hope will boost profits in coming months.