NEW YORK — Best Buy’s third-quarter net income fell more than expected as it lost sales of lower-priced TVs and laptops to competitors, and more expensive 3-D and Internet-connected TVs failed to catch on.
Shares of the largest U.S. electronics chain fell nearly 15 percent Tuesday as the results raised fears over Best Buy’s holiday season. The company also cut its guidance below analyst expectations.
Best Buy benefited when Circuit City went out of business last year. Now it’s getting squeezed between online sellers such as and discount stores like Walmart and Target.
All sharply reduced prices on flat-screen TVs to drive sales during Black Friday and the busy shopping weekend after Thanksgiving.
Chief executive Brian Dunn said Best Buy’s strategy instead is to offer competitive prices for brand-name TVs rather than discounting lower-end TVs to drive sales.
But that strategy caused a revenue shortfall because pricier 3-D TVs and Internet-connected TVs proved less popular than Best Buy expected — while tablet computers and smartphones have captured consumer’s minds and wallets.
According to research firm NPD Group Inc., TV units sold increased 2 percent from January through November 2010, but overall revenue from TVs fell 8 percent, indicating people are buying cheaper TVs and a majority of households already have flat-panels.
“We’re on the downslope on the flat-panel TV product life cycle,” said Morningstar analyst R.J. Hottovy. “Portable electronics are driving sales of consumer electronics right now.”
