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Electronic Retailers' Shares Tumble
Associated Press



NEW YORK (AFX) - Shares of electronics retailers tumbled in Tuesday morning trading after Circuit City Stores Inc. bottomed out at a new 52-week low when it swung to a third-quarter loss and trimmed guidance for fiscal 2006.

Electronics retailers are operating in a highly competitive environment as prices are declining for consumer electronic products, like popular plasma and LCD TVs, MP3 players, digital cameras and wireless handsets.

Circuit City posted a loss of 9 cents per share in the quarter, widely missing analysts' consensus view of a profit of 5 cents per share, according to a poll by Thomson Financial. The company also cut its fiscal 2007 sales outlook, predicting its margins would be further squeezed by increased competition.

Just one week ago, rival Best Buy Co. reported a third-quarter profit that missed Wall Street expectations and said it had to lower prices because of stronger competition.

UBS Investment Research analyst Brian Nagel said Circuit City's results are very disappointing and 'a significant step backwards in the company's turnaround efforts.'

Nagel said the consumer electronics sector has been hurt by aggressive promotions early in the holiday shopping season and noted that Circuit City's solid sales couldn't offset weak margins and expense controls.

Nagel said he is placing his 'Buy' rating and $35 price target on Circuit City under review.

Shares of Circuit City, the nation's No. 2 electronics chain after Best Buy, declined $4.10, or 17.8 percent, to $18.94, after bottoming at a new 52-week low of $18.25 on the New York Stock Exchange.

Rival Best Buy lost $1.68, or 3.4 percent, to $47.64, Wal-Mart Stores Inc. declined 46 cents to $45.91, and RadioShack Corp. shed 51 cents, or 3 percent, to $16.67. All stocks trade on the NYSE.

Dell Inc. also declined 29 cents to $26.10 on the Nasdaq.

Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



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