Turn it down!

Since extended warranties are claimed so rarely, the profit margins on them run as high as 40% to 80%, says Marlys Harris, finance editor for Consumer Reports. That can pad a company's bottom line nicely. During 2004, in fact, nearly 100% of Circuit City Stores' (CC) and 50% of Best Buy's (BBY) operating income came from extended warranties, say analysts. Is it any wonder that the big box retailers aggressively push these contracts?