Circuit City Stores Inc., the second-largest U.S. electronics retailer after Best Buy Co., fired 3,400 of its highest-paid hourly workers and will hire replacements willing to work for less.

Analysts and economists said the move is an uncertain experiment that could backfire for the chain. ``Firing 3,400 of arguably the most successful sales people in the company could prove terrible for morale,'' Colin McGranahan, an analyst with Sanford Bernstein & Co., wrote in a note today.

Circuit City pays about $10 to $11 an hour, on average, said Rick Weinhart, an analyst with BMO Capital Markets Corp. in New York. Entry level pay probably is close to $8 for inexperienced workers, he said.

Circuit City, along with Best Buy, was forced to slash TV prices during the 2006 holiday season after Wal-Mart Stores, Home Depot and CostCo Wholesale Corp. began selling flat panels for less. Its stock has fallen 21 percent over the past 12 months as profit from selling flat-panel televisions plummeted.

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