Industry Overview

United States retail sales in June were reported to be propping up the US economy with a positive increase led by auto dealerships. The NPDTechworld^SM point-of-sale data for June continues the good news for the consumer electronic product categories. Preliminary data is not available for the telecom categories.

June 2002 Dollar Sales were 1.9% Higher Than June Dollar Sales Last Year

Father's Day appeared to be the driver for the month with traditional gift items showing strong increases. MP3, DVD, stereo headphones, big TVs, digital camcorders and home theater audio systems were all showing double digit increases.

Dollar Sales YTD 2002 Compared to 2001
	January	February	March	April	May	June
Video Categories	down 10.3%	up 10 .9%	up 9.5%	up 14.5%	up 16.2%	up 7.1%
Audio Categories	down 18.6%	down 2 .3%	up 1.2%	down 2.1%	up 3.4%	up 1.6%
Total A/V Categories	down 7.04%	up 7.5%	up 6.6%	up 8.6%	up 11.7%	up 5.2%
Imaging	down 27.9%	down 12.5%	down 7.3%	down 2.7%	up 4.6%	down 6.6%
Telecom	down 26.4%	down 4.3%	down 5.8%	down 3.4%	down 6.8%	down 4.7%

Stronger than expected Christmas sales coupled with conservative production plans influenced by September 2001 events resulted in product shortages in early 2002. Pipeline fill has also been delayed until new model introductions.

KEY CATEGORY SUMMARIES:

Telecom
Telephone answering devices were 6% above last year's level. TADs are the largest product category but were unable to offset the 16% decline in cordless phones and the 9% drop in corded product. Although two-way radio unit sales were up 11%, dollar sales were down 4%.

Imaging
Imaging continues to be pulled down by binoculars, film, analog cameras and the cameras and attachments for PCs and PDAs that are included in the overall category. Conventional film camera dollars were 22% down compared to last June. Dollar sales of film were down 16%. The bright spots were single use cameras (up 19%) and digital cameras (up slightly).

Mobile Audio
The 12-volt mobile category dollars were up 7% in June. In-dash cassette and speakers declined while amps and in-dash CD showed growth. Satellite tuner box sales increased to $4.2-million in June compared to $2.8-million in May.

Home Audio
Home audio dollars were 9% down compared to June of last year. Home audio sales were dramatically behind 2001 levels if home theater audio system dollar sales are excluded. The dollar decline of home components and systems was almost 22% without home theater audio systems. These were 59% ahead for the month. CD product took large declines with players down 31% and recorders off 46%.

Portable Audio
Portable audio category dollars were 5% behind in June. CD products showed the greatest declines with portables down 11% and boomboxes down 7%. Digital music player units are selling at 2 1/2 times last year's dollar sales, 3 times last year's unit sales.

Video
Video increases are being led by digital camcorders, DVD and large screen televisions. Projection TV dollars were up 33% and flat panel display sales were three times last year's dollar sales. Digital camcorders were up 13% in dollars in June. DVD was 22% up in dollar sales but portable DVD declined 15%. Portable DVD player unit sales increased 25% but the average selling price declined dramatically forcing total dollar sales down. VCR continued to drop, down 37%.

Featured Product - Flat Panel Televisions
Flat panel sales have developed slowly but sales are now gaining momentum. Increased awareness, better availability, better in-store presentations of the product and especially more affordable pricing are starting to drive sales.

The average selling price of PDP models declined to $7,875 in June 2002 from an average of $12,136 in 1999. 2002 PDP unit sales through June were up 177%, almost three times the first half sales of 2001.

LCD flat panels were at more than five times last year's sales rate year to date through June, up 424%. Average pricing in June was $1,215 compared to $864 last year. The increase is the result of improved availability, especially in the larger screen sizes.

Note: Data are from NPDTechworld's projected point-of sale panel and exclude direct sales, Internet, grocery, drug, Wal-Mart and Clubs.