Sept. 21 (Bloomberg) -- After spending hours trying to set up a secure wireless network for his laptop, home computer and printer, retiree Richard Lindahl finally called in a geek.

``I've had so many problems with equipment,'' Lindahl said after hiring a member of Best Buy Co.'s clip-on-tie wearing support crew known as the Geek Squad to come to his Oakdale, Minnesota home. ``It was just an overall cobweb of mistakes.''

Consumer electronics retailers Best Buy and Circuit City Stores Inc. see profit in Lindahl's frustration. They're adding thousands of workers to help customers -- regardless of where they shop -- with increasingly complex setups for computers and televisions. As declining equipment prices trim margins, services arms are becoming among the most profitable segments at the chains.

The legion of Geek Squad workers also helps defend against Wal-Mart Stores Inc.'s expanding television departments, said Best Buy Chief Executive Officer Brad Anderson.

``Computers are much more integrated in more people's lifestyle, and they're trying to use them for more challenging applications,'' Anderson, 57, said. ``If something goes wrong the immediacy of needing to get it right is wildly greater than what it used to be.''

Shares of Richfield, Minnesota-based Best Buy, the largest U.S. consumer-electronics retailer, have risen 24 percent this year and were down $1.01 to $53.83 at 4 p.m. in New York Stock Exchange composite trading. The stock of No. 2 Circuit City fell 68 cents, or 2.6 percent, to $25.58. For the year, it has gained 13 percent, while Wal-Mart's shares have increased 3.5 percent to $48.46.

Price Declines

For the first time, more flat-panel televisions are forecast to sell this year than traditional tube TVs, according to the Consumer Electronics Association, an Arlington, Virginia- based trade group. Wal-Mart, the world's largest retailer, is increasing its flat-panel TV selection.

Prices will drop as much as 30 percent this year, Best Buy said this month. That's turning flat-panels into commodities, and they're showing up in unlikely retailers, such as grocery stores. Home Depot Inc. offers a 23-inch Philips model for $700.

Circuit City also is promoting its support and installation services to keep customers, rebranding its operations ``Firedog,'' from PC Services, which replaced IQ Crew, which began in 2004.

The Richmond, Virginia-based retailer hopes to capture some of the attention paid to the Geek Squad, whose uniform includes short-sleeve white shirts, metal badges, too-short black pants and shiny black shoes.

`The Differentiator'

``I knew early on that hardware was going to be commoditized and service was the differentiator,'' said Geek Squad founder Robert Stephens, 37, who sold to Best Buy in 2002 for about $3 million. ``Retailers and manufacturers made their money on hardware, and service was an afterthought. It's always been a cost center, unless you build the DNA as a profit center.''

Employees' outfits and their Volkswagen Beetle ``Geekmobiles,'' are more than theater. They're designed to put customers at ease, said Stephens, who started Geek Squad in Minneapolis in 1994, then expanded to Chicago, San Francisco and Los Angeles.

``You can't have an ego wearing our uniform,'' he said. ``Our message is, 'We use our power for good.' We're really humble, but don't feel bad about not knowing about technology, because the sacrifice you'd have to make is you'd have to stay home 1,000 Saturday nights.''

Lindahl, 64, said he appreciated the technician's knowledge and willingness to answer questions. He paid about $160 for the installation. Geek Squad and Firedog charge flat fees based on the work requested.

Local Competition

In most cities, the companies compete with local or regional repair chains. Backed by Best Buy's marketing power, national advertising, and Geekmobiles parked outside of more than 800 Best Buy stores in the U.S. and Canada, services revenue is expected to rise to $1.1 billion in the year through March 2007 from $750 million two years earlier, estimates Piper Jaffray & Co. analyst Mitchell Kaiser.

Services and product warranties are likely Best Buy's most profitable segments on a percentage basis, Kaiser said. Technical assistance has helped both Best Buy and Circuit City meet or exceed analysts' profit estimates during the past three quarters.

While Sean Skelley, 39, head of services for Best Buy, said revenue eventually might reach $5 billion, he declined to say when. Neither Best Buy, with $30.8 billion in sales last year, nor Circuit City break out services.

Agents Hired

``Best Buy has a very well-known and trusted name behind this services initiative and they were first, so they have the advantage,'' said Scott Mlynek, who helps manage $21.5 billion at Cincinnati-based Fifth Third Asset Management, including about 1.2 million Best Buy shares.

Best Buy hired about 5,000 agents last year, and now has about 11,000. The company ended last year with about 1,500 home theater installers and plans to add 1,000 this year in time for the holiday season. Circuit City has about 2,000 Firedog technical workers.

Last month Best Buy opened Geek Squad City, a computer repair center near Louisville, Kentucky, the size of a Macy's, where 500 agents will fix computers. The center is near a United Parcel Service Inc. hub, giving Best Buy a place to concentrate repairs and store parts.

Best Buy sees Geek Squad as a standalone brand, Skelley said.

``Best Buy is a significant amount of Geek Squad's capability to grow, but it's only part of it,'' Skelley said. ``We believe the brand, quite frankly, can be as good as Starbucks, and could be in many different places.''

To contact the reporter on this story: Mark Clothier in Atlanta at mclothier@bloomberg.net

Last Updated: September 21, 2006 16:33 EDT