Weekly television digest (Jan-Dec 1963)

6— television digest JANUARY 7. 1963 • • • • MANUFACTURING, DISTRIBUTION. FINANCE PUBLIC VIEWS ELECTRONICS VIA BROKERS' EYES: For large segment of public, principal source of information about electronics industry — and evaluation of individual companies — is endless stream of surveys & analyses offered by major stock brokers. For outside look at electronics industry, as seen through eyes of financial specialists, we culled Nov.-Dee. offerings in our weekly "reports & comments" listings, came up with these observations: "Consumer electronics industry is having one of its most profitable years in more than a decade," reported Thomson & McKinnon, "Consumer buying, stimulated by the acceptance of color TV, could reach $2.2 billion in 1962, compared with $2.08 billion in 1961. We project a further although modest gain in consumer electronics volume in 1963. Entertainment communications systems will probably account for the bulk of volume, but other electronically-controlled equipment, such as appliances, will command a rising percentage of consumer spending." Broker noted that color TVs "are being aggressively pushed," concluded 1962 sales "could reach 400,000 vs. 175,000 last year, and the figure might reach 800,000 in 1963." Electronics buying by govt., Thomson & McKinnon said, has "been estimated at approximately $8.2 billion for 1962, some 17% over 1961." With "huge growth of the space effort" total "govt, demand could rise by 50% in the next 3 years." RCA, analyzed Shields & Co., "will consider 1962 as a year of progress — mainly in the improvement of its profit margins." RCA sales in 1951-61 period increased 144%, but "net earnings have shown only a 10% rise." However, Shields emphasized, "after years of steadily rising volume but imchanged or declining earnings, RCA reversed this trend in the first 9 months of 1962," when net income per share rose 46% on a 16% sales gain. Explaining reasons "behind this improvement & why we feel this will continue," Shields noted "color TV is now in a money-making stage, era of extraordinary development expenditures seems to be coming to an end," data-processing costs have been reduced. "It is estimated that RCA lost 60^ a share on dataprocessing in 1960 and 80?; in 1961." Losses in 1962 "will be under 40^ and a breakeven point should be reached in 1963." Looking ahead. Shields noted "good possibility" of per-share earnings of "$3.15 or better" in 1963 (vs. estimated $2.75 in 1962) & "possibly $4 per share by 1964." Sylvonig, noted Dean Witter & Co., has been a drag on GT&E earnings, but better times ore coming. "While considerable time will be required, the GT&E management is intent on improving Sylvania's profitability and has set 4.5-5% of sales as a minimum profit margin goal," broker said. Sylvania's profit margin slipped to 1.1% in 1961 from 2.9% in 1960. Dean Witter emphasized that GT&E "has just projected 1962 net for Sylvania will be up some 40-45% — to around $8 million from $5.6 million in 1961, which included a $1 million surplus adjustment." Sylvania accounts for some 60% of GT&E's manufacturing group sales and divides its volume roughly 70% commercial & 30% defense. Concluded Dean Witter: "GT&E is in good financial condition. At the end of 1961, the current ratio of assets to liabilities was 1.39:1. . . . Sylvania had a current ratio of 2.7:1." Sylvania, "for the future, offers a twofold opportunity — above average growth in the dynamic electronics markets & improved profits through potentially higher margins." Zenith, "aided by its emphasis on high quality products, is the largest maker of TV sets," reported Thomson & McKinnon. "Despite keen competition Zenith accounts for some 20% of industry volume." Broker noted experimental operation of "Phonevision," termed prospects "imcertain," said "profits might not accrue to Zenith for several years." Conclusion: "Zenith's record of outperforming the industry & its bright long range outlook makes it attractive for purchase. Finances are strong. Capitalization is simple, no funded debt, no preferred stock, only 9,038,177 shares of capital stock." Motorola "restricted results in 1961" through entry into new fields but increased its "potential for the