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Best Buy Co., Inc. Message Board

  • bilbobag4 bilbobag4 Jan 18, 2013 6:05 PM Flag

    Too Much Emotion Involved

    Been reading the boards here and I see those of you making your case for being long or being short and either side can make a decent argument for either position. I have no vested interest in BBY stock but I have been following it to see if there is an opportunity that exists. A lot of the case to purchase the stock and go long (I believe) comes from recent stories like Research In Motion that was left for dead and is now on a run. The difference is (as I see it) they at least had a new product in the pipeline and a current subscriber base - that while challeneged - is a last opprotunity to keep, grow and expand their revenues. Best Buy has to do one thing and one thing only - they MUST increase revenues. This is a TOUGH battle for them as they are in a saturated retail space with many competitors (even if you forget the internet side of the business) they are also in a mature area - they must depend on companies putting out new products that people want. They can't expand revenue easily as they are limited to the segment of the business they are in. Others such as WalMart - Target and others - well - they have HUGE stores filled with diversifed products and can well afford to have a mega sale on TVs let's say - and off set that reduced pricing with all of the other purchases the customer will make once in the store. These retailers can also bundle sales - as in - buy $100 of any merchandise and get $75 off a Television. As for Best Buy - with a book value of $10.38 per share - and a cash burn problem - add to that a new CEO who has no background in the electronics industry and I just can't see this stock price sustaining and I certainly can't see private equity showing much interest right now. Maybe after a few quarters or a year of proven progress - maybe then I can see the company going private or having takers interested - but a buyout of shares is just the beginning of the process. That means that private equity not only has to pony up the money to purchase all outstanding shares - but they must also be prepared to finance BBY's needs and it seems like a never ending money pit that may or may not prove to profitable. It is a HUGE risk for private equity. Circuit City used almost the exact same approach as BBY is using now and you see how that went. It is a shame as I like BBY as a consumer - BUT I personally think it is just too little too late to save this company as a real going concern. The time to make the changes that BBY is trying to make was 3 years ago - they just waited too long to reinvent themselves. The balance sheet is most telling and numbers just don't lie. I don't think they are going out of business any time soon - if at all - but they might just plod along and be a $7 to $9 stock and survive that way. Good luck to all

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    • Everything you wrote makes sense BUT nowadays the stock market and specially manipulated stocks like BBY do not act like their finances and performance anymore.

      These days all stocks are easily manipulated by the big hedge firms and almost do the opposite of common sense in order to squeeze the shorts or kill the greedy bulls.

      The stock market has become a game and not a place to invest your money.

      Sentiment: Strong Sell

      • 1 Reply to anthony_chicago00
      • Anthony - I agree with you and the stock market manipulation - more so now than ever before. But I also say that is it is a game that plays for a while and then it is over, Once all the pump and dump and insterest of the media dies down - you have nothing left to manipulate and the company and its stock price settle in at the share price the valutaion reflects. Just look at Dell - who ever would have thought 10 years ago that they wouldn't cease to own the PC market. They took customers for granted and turned a quality product into a cheap plastic box and now - even with taking the company private being on the horizon - the price of the company still reflects the billions of dollars of revenue they gave away. That is another company that I liked as a consumer - what a shame that I lost confidence in them years ago and became an IBM customer instead. Getting the customer is one thing - keeping that customer loyal - that is the challenge. Thank you for your comments - good perspective

 
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