Best Buy Taps Tablet Growth, But Cuts Costs

NEW YORK (TheStreet) -- Strong sales of tablets such as Apple's (AAPL) iPad provided one of the highlights in Best Buy's (BBY) mixed fourth-quarter results, reported before market open on Thursday.

The Minnesota-based firm reported earnings of $2.47 a share on revenue of $16.63 billion. Analysts were expecting earnings of $2.16 per share on $17.22 billion in revenue.

Investors baulked at Best Buy's miss, pushing the company's stock down $1.65, or 6.2%, to $24.97 on Thursday morning.

From an Apple perspective, the most important thing Best Buy noted in its earnings release was that "Domestic segment tablets and eReaders comparable store sales each increased low triple-digits." This figure, of course, includes not only the iPad, but Kindle devices from Amazon (AMZN).

The iPad's success is nothing new, given Apple's record fiscal first-quarter, when it sold 15.43 million tablets. According to Apple, the new iPad is also selling extremely well, with the consumer tech giant selling over 3 million new iPads in its opening weekend.

Despite stellar demand for tablets and e-readers, however, Best Buy still missed analyst's fourth-quarter revenue estimate by a wide margin. The company also unveiled a multi-year cost reduction program on Thursday, which includes the shuttering of 50 U.S. big-box stores in fiscal 2013. Overall, the company expects to make $800 million in planned cost reductions by fiscal 2015.

The Minneapolis-based company also announced plans to boost its performance, such as the opening of 100 mobile small format stand-alone stores in the U.S. during fiscal 2013.

"In order to help make technology work for every one of our customers and transform our business as the consumer electronics industry continues to evolve, we are taking major actions to improve our operating performance," explained Brian Dunn, the Best Buy CEO, in a statement released before market open. "We intend to strengthen our portfolio of store formats and footprints --- closing some big box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations."

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--Written by Chris Ciaccia in New York

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