(Best Buy article updated with analyst commentary.)



) --

Best Buy's

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profit more than tripled in the third quarter as the company upped its full-year outlook.

But despite the good news, Best Buy stock is still tumbling, as it says fourth-quarter gross margins will feel a pinch.

"The company believes its improved revenue outlook for the fiscal fourth quarter will primarily be driven by categories in the domestic segment with lower gross profit rates such as notebook computers and entry price-point televisions across all screen sizes," Best Buy wrote in a statement. "As a result, the company anticipates a lower fiscal fourth quarter gross profit rate than previously expected."

"This fuels concerns on the commoditization of the product cycle and that the bankruptcy of Circuit City is not relieving the competitive environment with


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continuing to push into the space."

Shares are off 5% to $43.10 in pre-market trading, after Best Buy reached a new 52-week high on Monday.

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During the quarter, Best Buy earned $227 million, or 53 cents a share, compared with $52 million, or 13 cents, in the year-ago period.

Excluding one-time charges, the company actually earned 51 cents a share, easily topping Wall Street's consensus of 43 cents.

Revenue rose 4.3% to $12 billion from $11.5 billion last year, while same-store sales increased 1.7%. U.S. comparable sales jumped 4.6%, as traffic and average ticket improved. Domestic online sales also gained 20% during the quarter.

The company saw strength in notebook computers, flat panel televisions, mobile phones and appliances, which offset some weakness in gaming, movies and music.

Looking ahead, Best Buy expects full-year earnings in the range of 3 to $3.15 a share, better than prior forecast between $2.70 and $3 a share.

-- Reported by Jeanine Poggi in New York.

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