November 12, 2008 9:35AM

Gentlemen at Best Buy

By Ray Hennessey

There was a big omission in Best Buy's nasty earnings warning this morning: its competitor's bankruptcy filing.

Yes, the market is bad for Best Buy, which drastically cut earnings projections and used words like "seismic" to describe the slowdown in consumer spending. But, while earnings will fall short, they will still be earnings.

Its biggest competitor, Circuit Cuty, had no such luck, and filed for Chapter 11 bankruptcy protection earlier this week. And Best Buy, despite a lower outlook, has gained market share and will likely continue to do so as Circuit City closes more stores.

So why not mention it?

Well, maybe Best Buy is just trying to be a mensch, not pointing out that, as bad as its business is, Circuit City was way worse. The gentlemanly thing to do is to ignore the misfortune of others.

Or, more likely, it's just not clear yet what the impact of the closings is going to be, and that should actually help those who remain Best Buy bulls, even after the big profit warning. If there is upside to Best Buy's projections, it will come from the luring and retention of Circuit City customers who flee during the uncertainty of the bankruptcy.

(As an aside, Best Buy did touch on bankruptcy, but in a different context: It had to establish a new cred facility because one of its lenders filed for bankruptcy, limiting its ability to tap capital.)