Huge Decline in Consumer Electronics Spending According to Latest ChangeWave Survey

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ChangeWave's latest consumer spending survey shows a steep decline in U.S. retail spending on a range of popular consumer electronics products. This downward trend is taking its toll on electronics stores, especially Best Buy (BBY) and Circuit City (CC) -- although Costco (COST) and Wal-Mart (WMT) look set to maintain their electronics market share going forward.

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There is frightfully little in our findings to suggest the federal stimulus plan will jumpstart consumer spending on electronics and popular gadgets

The latest consumer spending survey from ChangeWave Research shows a sudden huge pullback in U.S. consumer retail spending on electronics -- the largest decline since 2002.

The survey of 4,427 consumers, conducted February 18-25, looked at discretionary spending on a range of popular electronic devices, including video game consoles, digital cameras and iPods. The ChangeWave survey network identifies technology products, companies and sectors best-positioned to capitalize in today's markets.

In an unprecedented sign of weakness, only 19% of survey respondents say they'll spend more on electronics over the next 90 days compared to 33% who will spend less.

"These results clearly show that the consumer electronics sector is getting whacked," said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing.

(Detailed charts on consumer electronics trends, along with additional ChangeWave findings can be downloaded at changewave.com/electronics).

Hardest Hit Consumer Electronics Stores

The spending downturn will disproportionately affect key electronics retailers, with Best Buy (BBY) (45%; down 6-pts) and Circuit City (CC) (14%; down 3-pts) hit hardest. Amazon (16%; down 3-pts), Apple (6%; down 3-pts) and eBay (7%; down 2-pts) will also register declines.

Costco (COST; 23%) and Wal-Mart (WMT; 12%) are the top two stores bucking the consumer retail spending downturn -- both of which look set to maintain their consumer electronics market share going forward.

Hardest Hit Electronics Items

Several consumer electronics favorites will be hit hard over the next 90 days, including LCD TVs (10%; down 4-pts), digital cameras (7%; down 4-pts), cell phones (8%; down 6-pts) and iPods (2%; down 4-pts) -- all which are down significantly from a year ago.

Despite lackluster consumer electronics spending, there are still some bright spots. The Nintendo Wii remains a hot seller among consumers, with 8% saying they plan to buy one in the next 12 months -- up 3-pts from a year ago.

High-Def DVD players were another bright spot in the survey, with 9% of respondents saying they plan to buy a Blu-ray HD DVD player in the next 90 days. GPS devices (9%) also continue to hold their own among consumers.

Will the Tax Rebate Check Help?

According to a related ChangeWave consumer spending report, among respondents expecting to receive a special tax rebate this spring, only 7% say they're likely to spend it on consumer electronics.

This number pales in comparison to the strong majority who say they're likely to use the special rebate to either pay down debt (33%), invest the money (23%), or save the money (21%).

"There is frightfully little in our findings to suggest the federal stimulus plan will jumpstart consumer spending on electronics and popular gadgets," said Smith. "Rather, our findings point to an increasingly preoccupied American consumer who has fallen out of love with gadgets -- at least temporarily."

To sign-up for real-time email alerts from ChangeWave on emerging trends in technologies and companies, visit changewave.com/hotwire.

About ChangeWave:
ChangeWave runs a proprietary network of more than 15,000 individuals who are surveyed on a range of business and investment research and intelligence topics. ChangeWave collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.

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DARLENE MARCH

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