Falling Prices Starting to Hit Electronics Retailers

Shoppers are stocking up on consumer electronics, but rapidly falling prices for televisions, computers and other gadgets are adding to the woes of recession-scarred retailers.

Industry bellwether Best Buy Co. said Tuesday that revenues grew and earnings quadrupled for its third quarter ending in November, citing higher sales of inexpensive netbook computers and smaller flat-panel televisions. But even Best Buy (BBY), the nation’s largest electronics chain by sales, is feeling the pinch of gadget deflation.

The Richfield, Minn., retailer warned that its fourth-quarter profits as a percentage of revenue could disappoint because buyers are gravitating to less expensive electronics that offer slim profits. Its shares tumbled 8.5 percent, or $3.84, to $41.53 in 4 p.m. New York Stock Exchange trading, after hitting a 52-week high on Monday.

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