Sharper Image Needs...A Sharper Image

For six years, the Ionic Breeze Quadra air purifier was Sharper Image Corp.'s (SHRP ) primo money machine, contributing an estimated 40% to 50% of the gadget retailer's sales. Now, the danger of relying too heavily on one hit product is becoming clear.

As rivals pile into the market, demand is slowing for the $350 Ionic Breeze, say analysts. That has left Sharper Image scrambling to come up with a hot new gadget to replace it, even as costs are rising and efforts to boost sales by diversifying into wholesale are slashing margins. The result: tumbling earnings and a host of unhappy shareholders. Since early August, when Sharper Image warned that earnings would come in lower than expected, the stock has fallen 29%, to $18.81.