Record iPhone 5 sales may provide a small, short-term earnings boost for Best Buy as the company's new chief executive Hubert Joly tries to resize the business and fend off buyout efforts by co-founder and former CEO Richard Schulze.
However, even if the iPhone 5 generates the type of consumer demand that would normally play to the favor of an electronics retailer and which Nobel Laureate Paul Krugman estimates could add up to 0.5% to overall US GDP (JPMorgan Chase puts it between 0.25% and 0.5%), Best Buy shareholders shouldn't expect a material impact on the company's turnaround or takeover prospects.
Meanwhile, in the sale of iPhone accessories and ancillary products, which may need upgrading because of the iPhone 5 Lightning connector cable, online electronics retailers including Amazon
"I don't think we are going to see enough of an impact from iPhone sales for there to be a material change," says RJ, Hottovy, a retail analyst at Morningstar. In fact, trends in how handset manufacturers launch new products in the hyper-competitive smartphone market may be playing against Best Buy's favor. "The success of iPhone launches will continue to have less benefit for Best Buy over time," says Hottovy, citing the growth of Apple branded stores and a consumer shift to online orders.
Apple Stores have pulled iPhone sales inward, and as the company takes creator control of its product launches, competitors like Microsoft may yet follow suit, to the detriment of Best Buy. The iPhone 5 is the marquee product in a new wave of smartphone launches that includes Nokia's
Hottovy and other analysts concede that a new wave of smartphone products led by the iPhone 5 will have an obvious incremental benefit to Best Buy's earnings in the near-term, but can't solve the big Best Buy problem of sustaining electronics spending.