updated 10:40 am EST, Tue December 14, 2010
Best Buy drops on poor TVs but helped by iPad
Best Buy today reported a drop in profit for its fall quarter owed to TVs but countered by smartphones and the iPad. It still made $217 million in net income but saw its core home electronics business shed 10.6 percent of its revenue as it saw a low double-digit drop in TVs as well as matching home theaters and movies. However, it saw a comparable increase in smartphones as well as a single-digit boost to notebooks, which it credited primarily to "strength in tablet computers."
The company wouldn't mention the iPad by name but was selling Apple's tablet almost exclusively for the three-month span. Samsung's Galaxy Tab only reached the US in November, at the end of the period, and wouldn't have been a major factor. Best Buy has gone on record in the past as saying that the iPad was cutting netbook sales in half in those retail stores that were carrying the tablet and has just recently begun selling the iPad through its online store.
The shift in attention validates fears from LG, Samsung, Sony and other major TV builders that they would face overstock after a lack of demand. Companies have seen slower uptake of 3D than hoped for, leading chains like Best Buy to offer free PS3s and otherwise slash prices to sell the sets. Analysts have already observed that the market was reaching saturation and that many customers are now buying extras like iPads as they either already have a good TV or would rather spend less on a genuinely different device.
The shift also shows a relative lack of success in keeping TV prices high through feature additions, including 3D and Google TV.