Best Buy Co Inc beat quarterly profit estimates as strength in its mobile business offset weak demand for televisions and entertainment software in the all-important holiday season.

But analysts were cautious about the longer term outlook for the company.

The top U.S. consumer electronics chain, which recently announced plans to open about 150 Best Buy Mobile small-format stores in the United States, saw a low double-digit comparable store sales increase in mobile phones even as overall comparable-store sales fell in the fourth quarter.

The retailer is focusing on selling more mobile phone, broadband and TV connections rather than expensive televisions as post-recession U.S. shoppers keep a tight rein on spending amid rising gas prices and high unemployment levels.

Despite the big focus on its profitable mobile business, many raised concerns about Best Buy's long term prospects citing continuing pressure on its ailing TV business.

It is very difficult for Best Buy to post positive comps when a category that is 20 percent of their sales is comping down double digits, BB&T Capital Markets analyst Anthony Chukumba said.

Net income fell to $651 million, or $1.62 a share in the fourth quarter ended February 26, from $779 million, or $1.82 a share, a year earlier. Excluding items, it earned $1.98 a share, well ahead the analysts' average estimate of $1.85 a share, according to Thomson Reuters I/B/E/S. (For a related graphic, click: http://r.reuters.com/kax68r)

Best Buy shares were down 7 cents at $31.78, reversing course after being up 3 percent earlier on Thursday morning on the New York Stock Exchange.

The stock appears to be getting a 'better than feared' reaction, JPMorgan analyst Christopher Horvers said.

Given the lack of sales visibility and little reason to be optimistic before easy back-half comparisons, the arrival of more competitive tablets, and a labor market rebound, there isn't much else to hold on to for the next two quarters that can put a significant dent in the secular bear case.

Best Buy has consistently lost bargain-hungry shoppers to online retailer Amazon.com Inc and mass merchants Target Corp and Wal-Mart Stores Inc.

Best Buy should see some near-term relief from the concerns circling the name, Stifel Nicolaus analyst David Schick said. The problems re-emerge, though, as the longer-term view is taken.

For fiscal 2012, the company sees earnings of $3.30 to $3.55 a share, excluding previously announced restructuring charges and potential share repurchases. The outlook compared with Horvers' estimate of $3.44 and consensus of $3.57.

On Thursday, GameStop Corp, the world's largest retailer of video game products, also posted a higher-than-expected quarterly profit.

Best Buy's decision to focus on promoting pricier televisions backfired in the early part of the holiday season. The retailer advertised cheaper TVs later in the season, but its December same-store sales still fell 4 percent.

Same-store sales fell 4.6 percent in its fourth quarter, including a 5.5 percent decline at its U.S. stores open at least 14 months.

Wedbush analyst Michael Pachter was looking for a 2.2 percent same-store sales decline in the quarter, including a 3 percent decline at its U.S. stores open at least 14 months.

(Editing by Dave Zimmerman)

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