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Best Buy Co., Inc. Message Board

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  • stockmamma stockmamma Jan 18, 2013 8:08 AM Flag

    Bullish signs for Best Buy ?

    Agree completely. Let me add a few more thought:

    The sales tax advantage of online retailers is going away.

    PE will not have to pay a dividend and can redeploy those dollars to pay down the purchase loan.

    BBY revenue is about 50B and AMZN is about 55B but mkt cap is no where near as close. Yet, BBY is profitable. Makes you wonder about investor intelligence.

    A slight increase in profitability will have a dramatic impact on earnings and thus valuation. Having shopped at BBY for years, I know there is a lot of room for improvement.

    We live in an instant gratification society. When I need a new dryer because mine broke, I could wait to order online. I went to the local BBY and bought it. I read another post about a person needing and wanting TV same day. If you can save 5-10% on sales tax you might wait, but that arbitrage is all but gone now.

    IMO, a buy does get announced soon and we will see the stock price exceed the initial price due to a short squeeze.

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    • And here is my observations regarding why the buyout will occur:

      Executives left - knowing they will be terminated when the buyout occurs.
      Board members left - knowing they will be terminated when the buyout occurs.
      Millions of dollars will be saved (no more dividends will have to be paid out).
      BBY sales have stablized and will improved with the Amazon sales tax loop hole closing.
      Schulze can make billions by reorganizing and taking BBY public again in a couple of years.

    • Totally disagree. BBY is NOT profitable. They've been losing money every quarter and the cash balance continues to decrease. I do LBO's for a living and this will be a hard stock to buyout. As a PE firm, we look to take out as much cash as possible and leverage up. Not many lenders will be attracted to a stock that has a decreasing cash balance and this will mean more equity. I hope the best for BBY, but I just don't see it in any of the above comments. Look at HGG for advice, much better balance sheet and they just released downward revised finacials.
      My best,

      Sentiment: Strong Sell

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