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Flat-Panel TV Sales Boost Best Buy Profit

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MINNEAPOLIS (AP) _ Best Buy Co. Inc., the nation's largest consumer electronics retailer, said fourth-quarter profits grew 13 percent as customers spent more on big-ticket items like flat-panel televisions, digital music players and laptop computers.

Best Buy said Thursday that earnings for the quarter ending Feb. 25 rose to $644 million, or $1.29 per share, from $572 million, or $1.13 per share, the previous year. That matched the consensus of analysts polled by Thomson Financial.

Sales totaled $10.69 billion, up 16 percent from $9.23 billion a year earlier and topping the consensus target of $10.53 billion. Sales at stores open at least 14 months _ a key retail barometer _ grew 7.3 percent.

Best Buy said revenue rose across all of its channels, led by a 50 percent upswing in online sales. Demand for flat-panel TVs and MP3 players drove a 17.7 percent jump in same-store sales of consumer electronics, followed by a modest rise in home office products, the company said.

Annual earnings grew to $1.14 billion, or $2.27 per share, from $984 million, or $1.96 per share, in 2004. Revenue climbed 12 percent to $30.85 billion from $27.4 billion.

The company forecast fiscal 2007 income of $2.65 to $2.80 per share _ including 3 cents to 5 cents of severance and reorganization costs _ with sales growing between 10 percent and 13 percent to a range of $34 billion to $35 billion. Same-store sales are expected to add 3 percent to 5 percent for the year.

It said it would no longer give quarterly guidance.

Analysts currently predict Best Buy's 2007 profit at $2.64 per share on $34.23 billion in sales.

Shares of Best Buy slipped 12 cents to $54.40 in morning trading on the New York Stock Exchange. They are still near the higher end of their 52-week range of $31.93 to $57.69.

Earlier this week, Best Buy said it may lay off workers as part of a reported plan to trim $300 million in yearly expenses. Greater spending in recent months has been attributed to store makeovers aimed at catering to certain types of customers.

``We'll redeploy resources as well as eliminate redundant and non-strategic work, which, unfortunately, means changing or eliminating certain positions,'' said President and Chief Operating Officer Brian Dunn. ``But we'll add jobs in those areas that directly support our growth.''

In a research note, Credit Suisse analyst Gary Balter called it a good quarter.

``While expenses look high, much of that reflects the profit sharing numbers, so should not be a worry. These are solid numbers and should allay concerns that there was a significant slowdown in business in February.''
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