A multitude of sources (chief among them, research firm iSuppli) voiced concerns about the sales and supply/demand numbers coming in from makers of LCD and plasma televisions last week. Let's briefly review the facts, then try to make a little sense of them.

For the first time in more than a year, LCD computer screen prices began to fall this month. While the industry has been rushing to boost production of these profitable products recently, the very prices that make LCD computer monitors and televisions so profitable are keeping consumer demand depressed. I mean, really, if you're worried about losing your job to outsourcing, and your energy costs are through the roof and that has you saving up to buy a new Toyota (NYSE:TM) Prius to save on gas costs, how likely are you to shell out $1,000 or more for a new TV? Not too likely. And as a result, manufacturers find themselves hip deep in LCD screens and are having to shave their prices to move inventory.

What's more, this is just the beginning. We have already seen two high-profile joint ventures formed to produce LCD screens: the recently floated LG.Philips LCD (NYSE:LPL) -- a joint venture between LG Electronics and Philips (NYSE:PHG) -- and an equally heavyweight combination between Samsung and Sony (NYSE:SNE). Combined, these two teams are planning investments of as much as $40 billion over the next decade to construct plants to manufacture LCD screens.

Meanwhile, plasma TV screen production nearly tripled in the first quarter of 2004, rising from 65,000 sets a year ago to 175,000. With plasmas, the increase in production numbers is allowing manufacturers to capture efficiencies of scale and lower their prices. Average plasma TV prices in Q1 2004 were nearly $900 cheaper than they were a year ago. Moreover, iSuppli confirms that there is an oversupply of plasma TVs on the market.

With LCD makers facing competition from plasma makers on one side and rising inventories on the other (LCD supply should outstrip demand by nearly 10% in Q3 2004, only coming back into balance at the end of this year), the near future does not look particularly bright. Put it all together, and the facts seem to suggest that both LCD and plasma panel television prices may fall sooner rather than later. That's good news for you and me, as consumers. It's good news for retailers such as Gateway (NYSE:GTW) and Best Buy (NYSE:BBY), for which price declines mean more sales and bigger profits. But last week's news is going to come as a real disappointment to investors in the panel TV makers.

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Fool contributor Rich Smith owns no shares in any company mentioned in this article.