Electronic Industry Sees Expanding Horizons

Global trade credit insurer Euler Hermes ACI, North America's leading provider of trade credit insurance solutions and risk mitigation information, has issued an electronics industry outlook in its latest publication.

(PRWEB) April 25, 2006 -- Expectations for the electronics industry suggest moderate overall growth in technology spending, estimated in the mid-single digits, according to a report from global trade credit insurer Euler Hermes ACI.

In the latest issue of Foresight – a Euler Hermes ACI biannual publication – analysts state that the general trend of moderate sales growth for the electronics industry should support generally improving financial measures, as the stronger industry players have rebounded well from the collapse of the tech bubble in 2000. The report focuses on two of the main growth areas within the industry sector: computer hardware and video games.

“Hardware is a major factor in worldwide information technology spending, while video games are penetrating deeper into our culture and everyday lives,” said Euler Hermes ACI Risk VP Lynne Borkowski, who monitors the electronics sector. “These two sub sectors are just small examples of the total industry’s dynamic landscape.”

Computer hardware represents approximately 40% of worldwide information technology (IT) spending, which is expected to grow to roughly $1.5 trillion by the end of 2006. Annual spending in the IT market has seen tremendous growth over the years, rising an estimated 180% from 1993 to 2001; this is, in part, due to the widespread use of the Internet, which stimulated demand for a host of IT-related products and services.

Borkowski said the outlook for the sector is moderately optimistic. “Highly competitive pricing conditions will dampen sales growth levels, but unit volumes are expected to grow,” she said. “Computer hardware has essentially become a commodity, which is a valid description of some hardware markets where products differ very little and margins subsequently shrink.” These market sub sectors –disk drives, for example – see manufacturers compete in intense price wars.

Meanwhile, video games “aren’t just for kids anymore,” Borkowski said. While the video game market continues to be driven by the child- and teen-related products, there has been a notable increase in the “Rated M for Mature” games as the adult video game market continues to grow. The average age of video game players has risen from 23 to 29 in the past three years.

Looking ahead, the industry shows no signs of slowing. “No other entertainment industry has posted the sustained growth over the past decade that has been generated by the video game sector,” said Borkowski. “Given the technological and creative advances ahead, all signs point to more record sales for years to come.”

The full text of the electronics industry report can be found in the latest issue of Foresight, which can be obtained by sending a request.

Euler Hermes ACI is North America’s oldest and largest provider of trade credit insurance solutions and risk mitigation information and expertise. For more information about the company’s products and services, visit www.eulerhermes.com/usa.

About Euler Hermes ACI:
Euler Hermes is the worldwide leader in credit insurance and one of the leaders in bonding and guarantees. With 5,400 employees in 43 countries, Euler Hermes offers a complete range of services for the management of customer receivables. The North American subsidiary (Euler Hermes ACI) is headquartered in Owings Mills, MD. For more information visit www.eulerhermes.com/usa.

Euler Hermes, a subsidiary of AGF and a member of Allianz, is listed on Euronext Paris. Standard & Poor’s rates the group and its principal credit insurance subsidiaries AA-.

Press Contact:
Rick Ostopowicz
Euler Hermes ACI Public Relations and Communications Specialist
Phone: (410) 753-0652

These assessments are, as always, subject to the disclaimer provided below.
Cautionary Note Regarding Forward-Looking Statements:
Certain of the statements contained herein may be statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words ‘may, will, should, expects, plans, intends, anticipates, believes, estimates, predicts, potential, or continue’ and similar expressions identify forward-looking statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group's core business and core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults (vii) interest rate levels, (viii) currency exchange rates including the Euro-U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.

The matters discussed herein may also involve risks and uncertainties described from time to time in Allianz AG’s filings with the U.S. Securities and Exchange Commission. The Group assumes no obligation to update any forward-looking information contained herein.

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