Fears that thrifty American shoppers will hurt third-quarter earnings for makers of MP3 players, cell phones and other gadgets, pummeled the stocks of consumer electronics companies on Tuesday.

 

The fall came a day after two major consumer electronics companies – Apple and SanDisk (News - Alert) – issued grim forecasts.

 

On Monday, SanDisk Chief Executive Eli Harari blamed the poor results on “the rapid deterioration in consumer confidence,” which hurt sales to U.S. retail customers and cell-phone makers.

 

Apple (News - Alert) Inc. gave a lower-than-expected third quarter outlook Monday, but said wider economic woes have not directly affects its results. Apple shares fell 2.6 percent to $162.02 on Nasdaq on Tuesday as several analysts cut their price targets on the stock.

 

SanDisk, which makes flash memory for digital cameras and other devices, posted a second-quarter loss and lowered its revenue forecast Monday, sending its shares down 24 percent to $13.62 on Nasdaq.

 

Analog chip maker Texas Instruments (News - Alert) Inc. also cut its revenue forecast on Monday, citing slowing demand for its products, which are integral components of gadgets like mobile phones.

 

Global Crown Capital analyst David Wu said that with TI’s distributors apparently seeing normal sales, its weaker-than-expected outlook did not give any new insight into demand for consumer electronics. But he said the back-to-school and holiday shopping seasons – typically strong sales months for consumer companies – could see weakness in the U.S. due to high gas prices and consumer jitters about the economy.

 

Although consumers are tightening the grip on their wallets, which is “definitely a concern, with the tightening credit environment and rising commodity costs,” some companies, such as Apple, will do better than others, said American Technology (News - Alert) Research analyst Shaw Wu.

 

Wu said he still sees strong demand for pricey Apple products, such as the iPhone, because wealthier users of the products are not as likely to make cut backs. But even for Apple, revenue “could be light of high expectations,” he said.

 

Danielle Levitas, senior analyst at market research firm IDC (News - Alert) Group, said she did not expect the second half of the year to be a “washout,” but said profits are likely to be softer than expected for consumer electronics companies as consumers cut spending.

 

“It’s not that consumers won’t be buying at all,” she said. “It’s that consumers are going to look for bargains.”

 

Levitas expects sales of notebook personal computers and home entertainment devices to remain resilient because when people aren’t going out, they spend more on home entertainment.