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Can iPhone 5 Sales Record Buy Best Buy Some Time?

Stocks in this article: BBY AAPL MSFT NOK T

That's because while Apple's retail outlets are grabbing a growing sales hold of iPhones, iPads and MacBook products, Best Buy is hands down the top seller of PC-based desktops and netbooks. If Microsoft's Windows 8 operating system can bridge the divide between computer products and a consumer shift to mobile smartphone and tablet devices, it could yet revive what are sharply falling PC sales, which have cut at the earnings of Hewlett Packard (HPQ), Dell (DELL) and Best Buy.

While iPhone 5-based earnings expectations have pushed Apple's shares to a record high above $700, the outlook for PCs is tenuous at best and bleak at worst. On Tuesday, RBC Capital markets analysts cut their outlooks for semiconductor sector giants like Intel (INTC) on continued weakness and "secular change" in the PC market.

Long-time Best Buy bear Michael Pachter of Wedbush Securities highlights an upgraded Windows ecosystem and Microsoft's much-hyped tablet as a potential sustainable boost to Best Buy's relevance. "I actually think the Surface tablet is a big opportunity for them," says Pachter, who calls the device one of the few that compares to Apple." Pachter also believes the company's fate revolves around the stalled flatscreen TV market, and remains negative on the company's long term outlook.

Even if iPhone 5 sales draw $1 billion in revenue into Best Buy's coffers, "This will be nice for Best Buy. I don't think it is going to save them," Pachter concludes.

And while a record-setting iPhone 5 launch shows Apple remains a well-oiled machine in turning out relevant and well-received products, there's still big uncertainty about the pricing or launch dates of Microsoft's Surface tablet and other Windows 8-operated devices from Nokia and Research In Motion.

On Monday, Apple said it sold 2 million iPhone 5 this weekend, double the pre-order period sales of iPhone 4 and 4S iterations. Blockbuster sales figures were also confirmed by AT&T (T), which said the iPhone 5 set first day and weekend sales records. According to BMO Capital Markets analyst Keith Bachman, Apple is now likely to sell 24 million iPhones this quarter -- including eight to 10 million iPhone 5 units, and 50 million iPhones in the fourth quarter.

Hottovy says Best Buy's turnaround efforts revolve around shrinking or closing overextended retail outlets and reinvesting real estate sales into improving the company's customer service, online operations and pricing. Currently, Best Buy is looking to shutter roughly 10% of its retail space and using proceeds to drive employee training and the company's web presence.

In fact, amid the prospect of a buyout by co-founder Schulze, which gained new life in late August after Best Buy opened its books to what stands as a $24 to $26 a share offer, any owner of Best Buy is likely to focus on restructuring efforts over near-term iPhone sales.

There are competing visions for Best Buy outlined publicly by new CEO Joly and the company's estranged head Schulze, but Stephen Baker, vice president at consumer market research firm NPD Group, thinks the turnaround ideas are similar. "They seem to be talking about the same things, which is how to improve operations and shrink the size of the stores," says Baker.

Indeed, the iPhone 5 can boost U.S. GDP and the struggling U.S. economy, but it seems that only shrinking Best Buy has the power to boost its struggling shares.

-- Written by Antoine Gara in New York

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