Forbes: "Texas Instruments and Best Buy hit by competition, not lack of demand"

As mentioned in my earlier post, Best Buy beat on revenucs but got hit on the margins/EPS due to competition. This means that inventory is selling, but it's a tough pricing environment. That's actually OK for satellite radio...the more units that are sold, the more subs, ie SatRad makes money on capturing the consumer (recurring revenue), not the one time equipment purchase.

Electronics Are Okay
Matthew Kirdahy, 12.12.06, 4:46 PM ET, Forbes Market Scan

Rumors of the demise of consumer electronics appear to be exaggerated.
Investors spent Tuesday morning digesting – and worrying – about lower-than-expected earnings from electronics retailer Best Buy and an earlier revenue warning from chipmaker Texas Instruments.
Taken together, the reports raised fears that American consumers were avoiding electronics purchases, a potential indicator of recessionary pressures widening beyond the housing sector of the U.S. economy. The implications are broad, since U.S. shoppers are important to exporters in other countries, not least the makers of consumer electronics. But the problems appear to be more of competition than of lack of demand.
On Tuesday, Best Buy, the No. 1 U.S. retailer of flat-screen televisions, video-game consoles and the like, said net income for the third quarter rose 8.7%, to $150 million, or 31 cents per share, from $138 million, or 28 cents per share, a year ago.
But analysts polled by Thomson Financial had expected earnings of 35 cents per share. Revenue was just above forecasts of $8.42 billion.
Best Buy shares ended down 4.9%, or $2.62, to $51.30, in Tuesday trading.
RBC Capital Markets analyst Scot Ciccarelli said demand for consumer electronics remains strong, especially at Best Buy. Sales rose 4.8% for the latest quarter, better than the 4.0% expected, and its website generated a 30% sales increase over last year. Flat-panel TVs were the prime reason...read more: here

12/12/2006 08:24:00 PM

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