Best Buy second quarter earnings strong, but Apple iPad inventory constraints hurt traffic

Best Buy on Tuesday reported strong fiscal second quarter earnings, but said that "constrained inventory" of the Apple iPad hurt its market share over the last three months.

The company reported second quarter earnings of $254 million, or 60 cents a share, on revenue of $11.34 billion. Wall Street was expecting earnings of 44 cents a share on revenue of $11.54 billion.

Same store sales for the three months ended Aug. 28 fell slightly and gross margins were 25.7 percent.

As for the outlook, Best Buy projected fiscal 2011 earnings of $3.55 to $3.70 a share. Revenue will be $52 billion with same store sales increasing 1 percent to 2 percent. Wall Street was looking for earnings of $3.36 a share on revenue of $52 million.

Since Best Buy covers so much tech ground, its earnings are an interesting barometer of the sector. Some key learnings from Best Buy's quarter:

• Mobile phone sales were up in the low double digits.
• Mobile computer same store sales were up in the mid-single digits. That category includes tablet computers like Apple's iPad.
• TV sales were down due to weak consumer demand.
• Best Buy's retail market share in the U.S. probably fell 50 basis points. "The decline was primarily driven by the impact of lost traffic associated with constrained inventory during the initial iPad launch which adversely impacted traditional mobile computing traffic," said Best Buy, who noted that home theater as well as entertainment software traffic fell too.

Here's the Best Buy sales scorecard, which highlights how home office sales continue to chug along. The home office category has remained strong throughout the recession and modest economic recovery.