Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Dark Side of Big-Screen TVs

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Busts follow booms and the business cycle rolls on, but 2010 is shaping up to be the year it turns up for big-screen TV manufacturers and their suppliers. It probably won't get so heady again that you'll be able to buy a set at Home Depot (NYSE: HD  ) , as occurred during the last cycle, but there should be plenty of choices for consumers.

Turn on, tune in
According to the market researchers at iSuppli, there's a new wave of big-screen TV buying that's bound to drum up business for manufacturers. Global revenues from shipments of large-sized LCD panels are expected to rise by a whopping 40% in 2010.

However, not everyone is so certain the opportunity is crystal clear. LCD glazier Corning (NYSE: GLW  ) offered a rather timid outlook for 2010 when it reported earnings a few weeks ago. After a 41% surge in fourth-quarter sales, you'd expect it to have abandoned caution. But Japan's largest LCD TV maker (by sales), Sharp, also left in place a very cautious full-year forecast after it reported a return to profitability on the strength of flat-panel TV sales.

Set plasma rays to stunned
The price point dynamic has changed as well. In the previous cycle, LCD sets above 37 inches tended to be prohibitively expensive, which made the plasma TV the choice for those large, living room-mounted sets. Not anymore. LCDs are now competitively priced at most screen sizes, which means consumers have even more choices.

Sony (NYSE: SNE  ) says the market for LCDs has improved to the point where it expects to be able to increase sales next year by 33%, to 20 million units, and still maintain profitability. LG Display (NYSE: LPL  ) concurs, saying there's room for considerable growth for shipments to reach as much as 180 million, from 140 million in 2009.

Quality's a little fuzzy
But there's a dirty secret lurking in your big-screen TV that could serve as a reality check on this all-growth, all-the-time scenario. We'll charitably call it "planned obsolescence," only the obsolescence is coming a lot sooner than consumers were planning.

We were used to having our regular, tube TVs last 10 or 20 years before we had to start slapping the side of the box to adjust the picture. Not so with plasma and LCD TVs. In just a few years time, many sets are suffering from audio and video problems that highly dilute the viewing experience. In the rush to meet the demand of the consumer, the manufacturers seemingly tossed quality control aside.

The "black screen of death"
It's anecdotal, to be sure, but consumer affairs discussion boards are littered with complaints from thousands of people who've purchased TVs from Best Buy (NYSE: BBY  ) , Costco (Nasdaq: COST  ) , and RadioShack (NYSE: RSH  ) , all reporting the same thing: audio that stops working, screens suffering from the dreaded "black screen of death," and manufacturer help lines that are anything but helpful.

With repairs running into the hundreds of dollars, replacement becomes the most cost-effective solution for a set that's only a few years old. Maybe that's how manufacturers were planning on juicing sales, although they run the risk of ruining their reputations -- and inviting class action lawsuits.

Measure twice, cut once
We've become enamored of our technology and rush to embrace it. Manufacturers are all too willing to feed that demand, and with the new breed of sets coming to market, we'll be dealing with new technologies, too, like LED backlighting and 3-D. That's just more gizmos that can break down on us.

Before you join the stampede, you might want to take a little more time to research the quality of the sets that manufacturers churned out last time. Investors might want to sharpen their focus before deciding if the stock of the TV maker they're viewing is as cheap as it looks.

Best Buy, Costco Wholesale, and The Home Depot are Motley Fool Inside Value selections. Best Buy and Costco Wholesale are Motley Fool Stock Advisor picks. The Fool owns shares of Best Buy and Costco Wholesale. Try any of our Foolish newsletter services today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 04, 2010, at 4:00 PM, mgdunton wrote:

    I'll forgive you if you say you have'nt been following Corning very long, but for a stock with a forward P/E of 10 about to declare it's 1st dividend in a long time, I suppose there's a lot to be concerned about. Why issue strong guidance, when analysts who don't do their homework issue earnings estimates for more than the company guidance & then hammer the stock if it doesn't meet increased expectations. All the plants are running "flat-out" & cash on their balance sheet is at an all-time high. This stock is more than 80% owned by institutions.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1103589, ~/Articles/ArticleHandler.aspx, 10/28/2016 7:56:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 4:00 PM
BBY $38.78 Up +0.30 +0.78%
Best Buy CAPS Rating: *
COST $149.76 Down -1.10 -0.73%
Costco Wholesale CAPS Rating: ****
GLW $22.68 Down -0.24 -1.05%
Corning CAPS Rating: *****
HD $123.58 Up +1.32 +1.08%
Home Depot CAPS Rating: ****
LPL $12.29 Down -0.67 -5.17%
LG Display CAPS Rating: ***
RSHCQ $0.00 Down +0.00 +0.00%
RadioShack CAPS Rating: *
SNE $31.49 Down -0.04 -0.13%
Sony CAPS Rating: ***