Best Buy ended its year with a 3 percent drop in its fourth-quarter earnings as the nation's largest consumer electronics retailer suffered from a weaker economy.

The company earned $737 million in the last three months of the fiscal year, better than analysts expected. So was its guidance for the fiscal year ahead. But that guidance assumes a weak first half of the year and a strong second half.

"If it got substantially worse than today, then that's not in our forecast," Vice Chairman and CEO Brad Anderson said in an intervew. Neither is a better-than-expected economy.

Best Buy said its second-half growth will come from a combination of an improving economy, and internal actions such as expanding its Best Buy Mobile phone sales from 181 stores now to the majority of its more than 800 U.S. stores over the next 18 months.

The retailer expects growth in the television business to slow down in the year ahead. Comparable-store sales of consumer electronics, which include TVs, fell 4.6 percent for the quarter.

Best Buy said sales were strong through the holidays but fell off in January. For the quarter that ended March 1, sales fell 0.9 percent at U.S. stores open at least 14 months.

And it's not clear how much help it will get from the economic stimulus checks going out over the summer. A survey by the Consumer Electronics Association in February found that consumers expect to spend just about 4 percent of their stimulus checks on electronics.

"Traditionally these kinds of things have come directly into our cash register," Anderson said. But he expects consumers to save more of their rebate checks this time.

Jefferies & Co. analyst Dan Binder said several retailers are counting on a stronger second half.

"The million-dollar question is whether or not that actually happens," he said.

He's not so sure it will. Economic indicators such as surveys of lenders and the housing market suggest the environment for retailers will keep getting worse over the next nine months, he said.

"I think that's going to lead to another round of expectations being missed," he said. "While Best Buy is a great company in a great sector of retail, they're not immune to macroeconomic forces."

Best Buy shares rose 47 cents, or 1.1 percent, to close at $43.94 after rising as high as $45.66 earlier in the session. Its shares have traded in a 52-week range of $38.75 to $53.90.

Richfield, Minn.-based Best Buy said it made $1.71 per share for the quarter, versus $763 million, or $1.55 per share, during the same period last year. (Even though profits fell, earnings per share rose because there were fewer shares outstanding after a major share repurchase last year.) Analysts polled by Thomson Financial expected a smaller $1.65 per share profit.

Revenue rose 4 percent to $13.42 billion from $12.9 billion a year ago. Analysts expected revenue of $13.19 billion.

For the full year, Best Buy earned $1.41 billion, or $3.12 per share, up from $1.38 billion, or $2.79 per share, during the prior year. Revenue rose to $40 billion from $35.9 billion a year ago.

For fiscal 2009, the company expects a profit of $3.25 to $3.40 per share on revenue of $43 billion to $44 billion. Analysts had expected a profit of $3.31 per share. Best Buy said it expects comparable store sales to grow 1 percent to 3 percent for the year, with the fastest growth at its international stores.