Electronics giant Best Buy (NYSE: BBY) is not only suffering from the worst consumer holiday spending meltdown in years, but its beleaguered customer base is now fleeing to discount retailers like Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST).

So it appears Best Buy is getting hit with a double whammy, according to a November ChangeWave Alliance Research Network survey of 2,763 U.S. consumers.

The massive slowdown in consumer electronics spending this holiday season -- which the survey shows to be the weakest ever -- is a far cry from the surge that normally occurs at this time of year.

Only 19% of consumers said they'll spend more on electronics during the next 90 days compared with 43% who said less -- a net 40 points worse than a year ago.

Christmas came early for electronics retailer Best Buy (NYSE: BBY). Its largest competitor, Circuit City (NYSE: CC), waived the white flag of surrender by filing for bankruptcy. Free to operate as the single largest retailer for electronics, good times are surely here for BBY, right?

Not so fast, buster. The long-term benefits of a weakened competitive landscape are no doubt positive for BBY, but only if it manages to survive what most now believe will be a long and deep recession. This is not your ordinary recession. Businesses are failing and more are sure to follow. No firm, no matter its size or supposed strength, is immune, and all sectors are feeling the impact of deflation.

That deflation is bad news for companies that rely on the consumer for business. A sudden decline in spending can have significantly negative consequences. Employees, rent and other fixed costs must be paid no matter what is happening on the top line.You better hope your balance sheet can withstand multiple quarters of losses, because that is what is transpiring right before our very eyes.

RadioShack Corporation (NYSE: RSH) reported earnings for the third quarter the other day, and according to the bullet points of this article, the electronics retailer beat analyst expectations by three pennies. Earnings came in at $0.39 per share. And I say, so what?

Why do I say this? Well, to be honest, RadioShack has never been my favorite retail investment idea. No, I've never had a problem at any of the company's locations, but seriously, how often do you hear people talk about RadioShack? I don't hear many people talk about the place, I can tell you that. Best Buy Co., Inc. (NYSE: BBY), Wal-Mart Stores, Inc. (NYSE: WMT), Target Corporation (NYSE: TGT) -- these are the retailers people think of first when they think of electronics, fair or not. At least, that's what I've been getting lately. And here's an interesting wrinkle to the earnings report. Sales were driven by those digital converter devices that many households will need to use their television sets once digital broadcasting begins in February 2009. Not that this is an original observation, but when I read that, I immediately thought to myself "well, where does RadioShack go from here?" The company is going to find it tough to stand out among the crowd in the next few months. Brand equity is really going to come into play. The brand equities of the aforementioned competitors will aid them in bringing traffic onto their sales floors. When it comes to a day like Black Friday, which is the kickoff to the holiday shopping season, I think consumers will be most excited about the deals they can get at a Wal-Mart or a Target and not the ones they can get at a RadioShack.

Sure, that might sound obvious, but it's one of the reasons why I wouldn't want to put money down on RadioShack. The company's stock is near a 52-week low, but it's not a buy. Management is trying to improve its standing in the eye of the electronics consumer, but it'll be a long time before that happens. Besides, the bigger stores simply have more to offer both in terms of shopping experience and one-stop buying. There theoretically will always be a place for a RadioShack. But there's not a place for it, at least at this time, in my portfolio.

Disclosure: I don't own any company mentioned; positions can change at any time.

Investors initially cheered the long overdue departure of Circuit City Stores, Inc. (NYSE: CC)'s CEO but, just a few days later, the shares have hit a new 52-week low.

According (subscription required) to The Wall Street Journal, some analysts are concerned that the pre-quarterly earnings release departure is a sign that sales have continued to be weak.

The best outcome for shareholders, given the company's cash burn rate, poor sales trends, and weak balance sheets, would be a sale of the company to a strategic buyer or private equity firm. But the problem is that Circuit City has been trying to sell itself for months and the only interested party that emerged, Blockbuster Inc. (NYSE: BBI), quickly backed away from its preliminary offer.

Given that, it's hard to see what the upside for the company is. Better competitors like Best Buy Co. Inc. (NASDAQ: BBY) and Wal-Mart Stores, Inc. (NYSE: WMT) have killed Circuit City's niche, and this is a difficult market for a turnaround effort that would be tough in any market.

According to this Wall Street Journal (subscription required) piece, a member of the Circuit City Stores, Inc. (NYSE: CC) board has left the building. Lead outside director Mikael Salovaara resigned yesterday. Can you blame the guy?

No you can't. Circuit City doesn't have any sort of game plan at the moment, and it's sinking fast. The company's stock is priced at $2.31 as I write this. The goofy Blockbuster Inc. (NYSE: BBI) transaction is gone (for now, at least...there are reports saying that it could be resurrected at a later date, although I don't buy that it will happen at all). It isn't competing effectively against Best Buy Co., Inc. (NYSE: BBY) and Wal-Mart Stores, Inc. (NYSE: WMT). In short, Circuit City is a Titanic-like electronics retailer that doesn't know how to keep its ship from hitting icebergs.

So this resignation isn't surprising. Of course, is there any way to make money off the stock? I do believe there is downside to come on the share price, which would therefore imply that shorting it could work out. Alas, I wouldn't recommend it. You just know that some company and/or financial entity out there might come in at any point and make a bid, and the shares could skyrocket. Although the Blockbuster deal didn't make sense, it doesn't mean that there isn't some transaction scheme out there that would be logical. Circuit City is a stock merely to watch out of curiosity, it's not one to do anything about.

Disclosure: I don't own any company mentioned here; positions can change at any time.

Focus LLC, investment banking service provider, has announced the acquisition of U.K. based Avialec by Kapco-Valtec, in a move aimed in part at expanding Kapco-Vatec's marketing base. Avialec, based in Petersfield, England, is a provider of electrical components to the aerospace industry. Building on eight years of growth, Avialec company leadership sought the benefit of increased aerospace industry clout which Kapco-Valtec presents.

Barrie Prescott, CEO of Avialec stated in the Focus LLC press release, "I had decided it was time to put Avialec under the wing of a larger progressive organization with financial firepower to realize the many opportunities before us ... FOCUS was the perfect firm to help us realize our goals."

Kapco-Valtec, a leader in aerospace supply chain management, shall provide market leverage for Avialec to realize it's expected growth potential, while gaining the benefit of greater exposure to Avialec's major accounts in the U.K. Likewise, Kapco-Valtec shall provide broader exposure of Avialec to U.S. aerospace accounts.

The Focus LLC investment bankers press release stated: "As is the case with the growing number of international M&A transactions, this deal is a win-win for both companies. We were pleased to be able to complete the transaction in just over four months, said Manan Shah, a FOCUS Partner."

For further information regarding this acquisition and the services of Focus LLC, please visit the Focus website at www.focusbankers.com.

Shares of electronics retailer Circuit City Stores Inc. (NYSE: CC) have been soaring this morning after the company reported an unexpected fourth-quarter profit. It was the first time in the last six quarters when the retailer was able to post a quarterly profit.

For the quarter, Circuit City announced that its profit climbed to $4.85 million, or 3 cents a share, up from a loss of $4.25 million, or 3 cents, reported in the same period a year ago. The company's move to lay off employees to cut costs proved efficient in its fight against weak sales. Analysts were expecting the retailer to show a loss of 7 cents per share in the quarter.

Taking a look at the company's quarterly revenue, we see a decline of 8% to $3.65 billion, compare with $3.95 billion last year. For this period, the second-largest U.S. electronics retailer posted a drop of 10.4% in same-store sales. Quarterly revenue numbers missed analysts' predictions for sales of $3.79 billion, according to Thomson Financial.

Shares of electronics retailer Best Buy Inc. (NYSE: BBY) have been surging today, despite posting a decline in its fourth-quarter profit, as its earnings per share came in well above analysts' predictions. The company also issued a positive earnings outlook for fiscal 2009, sending its shares up over 2.5%.

The company said its quarterly profit dropped 3% to $737 million, from $763 million in the same period a year ago due to a slowdown in consumer spending. However, higher sales for laptop PCs and flat-panel televisions helped the company post quarterly earnings of $1.71per share, topping analysts' forecast for a profit of $1.65 per share.

Best Buy posted 4% growth for its fourth-quarter revenue, which climbed to $13.42 billion. During the period, the largest U.S. electronics retailer faced lower demand for its products as soaring gas prices and tight credit conditions put a curb on consumer spending. However, the company was able to successfully surpass those obstacles defying analysts' expectations for revenue of $13.19 billion in the third quarter, according to Thomson Financial.

Japan lowered its economic assessment for the first time in a year, saying growth is softening as slowing U.S. consumption is cooling demand for Japanese factory-produced goods, The Wall Street Journal reported Friday (Subscription required).

Japan's government also warned that chances of a further slowdown in Japan's export-driven economy are increasing. "The economy is recovering at a moderate pace recently," the monthly economic report from the Cabinet Office released Friday said, The Journal reported (Subscription required).

Economist David H. Wang told BloggingStocks Friday Japan's revised assessment suggests that the U.S. economic slowdown is already being felt in Japan.

"Japan's comments are usually low-key and generalized, so what one can read into the their revision is that they are experiencing lower demand from the U.S. for Japanese exports, and that they expect more of the same for this year," Wang said. The United States is the largest buyer of Japanese exports.

The head of Best Buy (NYSE: BBY) says that if consumers get hurt, so will his company's sales. But he held out some chance that the consumer would not stop shopping.

"We have never had to pull anything back in a significant way and don't see that on the horizon. Right now we see indicators that it's a tougher climate, but we don't see indicators to say that its likely to be a really difficult one," Brad Anderson told Reuters.

Mr. Anderson is clearly more upbeat than most retail CEOs. He sees interest in new consumer electronics keeping customers coming through his company's doors.

If Anderson is right, then Wall Street may be wrong. Shares in Best Buy are off 14% over the last month as Wall Street exits the retail sector.

Consumer electronics may be the one area that dodges the retail bullet. The sector did better than most for online sales during the holidays according to tracking services. Prices of game consoles and TV displays are coming down.

Perhaps retail chains are not all created equal.

Douglas A. McIntyre is an editor at 247wallst.com.

Circuit City (NYSE: CC) has announced that the retailer's top executive in charge of merchandising, services and marketing has left the company to take another position at Orchard Brands. David Matthews leaves at a time when the nation's second-largest consumer electronics retailer is in a precarious position. Its sales are flagging, quarterly losses are normal and the company just has nothing good going for it except for its existence.

So, you have to wonder whether Matthews saw the pink-slip writing on the wall or if he was actually recruited to become president of Orchard Brands. Circuit City CEO Phil Schoonover pitched the standard company line in announcing the leadership defection: "I wish to thank Dave for his leadership and many contributions over the past several years, including growing the Circuit City Direct business and starting our catalog business."

The CEO then said the merchandising, supply chain, services and marketing teams would report directly to him as the company settles in for a long fight for its share of holiday shopping revenue. Ah, the king is ready to lead his troops into battle, eh?

Schoonover hinted that the retailer will "start to execute" holiday sales plans. I hate to break this to you Phil, but if you have not already started these plans, why even bother? The competition is way ahead and it's only the 8th of November.

Given concerns about a possible slowdown in U.S. consumer spending in the quarters ahead, U.S. retailers haven't received much respect lately on Wall Street. But Target Corporation (NYSE: TGT) is one that should.

Target should post healthy 2007 same store sales growth on improving margins, aided by refinements to its electronics, apparel and home furnishings offerings, with a continued focus on value.

Further, Target's new store opening timetable remains on-schedule, with the company planning to open 100 new stores in F2008, including 30 SuperTarget stores; each should help overall revenue, although investors should keep in mind that these stores are not counted in same store sales revenue statistics. Target's shares closed Friday up 83 cents to $53.93.

In addition, Target's marketing campaign seems to be registering better with upper-middle-income shoppers, who appear to be increasingly seeking better values. The Reuters F2008/F2009 EPS consensus estimates for TGT are $3.56 to $4.06.

RadioShack (NYSE: RSH), a company with a presence of through approximately 6,000 stores, closed at $21.45. RSH is expected to report EPS on 10/29. Sprint (NYSE: S) announced it expects a net loss of 337,000 post paid subscribers and lower annual revenue expectations. BMO Capital Markets say's "this is bad news for RSH as we estimate revenues related to S make up over half of wireless sales and over 15% of total revenues." RSH is expected to report EPS on 10/29. RSH November option implied volatility of 59 is above its 26-week average of 41 according to Track Data, suggesting larger price risks.

Costco (NASDAQ: COST) is expected to announce 4Q EPS of 83 cents on 10/10. Wachovia (NYSE: WB) said on 10/8 "COST's outlook for margin should be one of the key issues in focus on Wednesday's call." WB has an Outperform rating on COST. COST October option implied volatility of 33 is above its 26-week average of 24 according to Track Data, suggesting larger fluctuations.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Competition is fierce among retailers these days, and even more so among e-tailers. All it takes to lose (or gain) a customer on the web is a few mouse clicks. Customers have never been so empowered to compare pricing, return policies and customer service offerings from the comfort of their own laps. So who is the best in the consumer electronics category when it comes to website response times and functionality among those couch surfers/buyers?

Not surprisingly, e-tailing giant Amazon.com (NASDAQ: AMZN) took a top spot in a recent survey, and a traditional brick-and-mortar retailer was at the top of the list also. Best Buy, Inc. (NYSE: BBY) joined its online-only competitor in being ranked as the top online destinations for buying consumer electronics items. I've rarely had a bad customer experience at Amazon (in fact, I can't remember one), but with so many other choices on the web these days, Best Buy must also be doing something right.

More folks are choosing its stores over competitor Circuit City Stores, Inc. (NYSE: CC), and they're apparently choosing the retailer's website as well. However, Circuit City did rank highly when it came to how well its website responds to customer input as well as website reliability (no downtime, I suppose). In overall search-related customer satisfaction among website electronics retailing, Amazon led the pack, leading the way in categories like price satisfaction, product research and overall site navigation and organization.

I have already blogging about the E3 conference twice this past month. But now, long-time media investor Larry Haverty has given Barron's Magazine his thoughts on video games, saying that Best Buy Incorporated (NYSE: BBY) may be a good way to profit from the business.

Haverty believes the combination of an upgraded cycle in the video game business and the transition to digital broadcasting will mean good times ahead for Best Buy shareholders. Forecasts for a 12% growth in the video game business for this upgrade cycle is way off with 25% industry growth being more likely as Take Two Interactive Software Inc's (NASDAQ: TTWO) Grand Theft Auto and Microsoft' Corporation's (NADSAQ: MSFT) Halo 3 hit the market, according to Haverty. I have noticed the same thing, that investors are underestimating the potential of this upcycle.

Best Buy has $2.5 billion in net cash, a $5 billion share repurchase program in place, and its competition is in trouble. The stock has been dead money for a while, but Haverty's argument is compelling. Best Buy is most definitely worth looking into here.