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Best Buy Co., Inc. Message Board

  • bg4value bg4value Jan 21, 2013 10:00 AM Flag

    New to BBY

    I've looked at BBY for a while but waited for the start of 2013 to pick up 2K shares @ $11.92. My initial thinking was, I think most agree, it's not a bk risk and after the usual end of year tax loss selling there might be a bounce. I am aware of the buyout talk, but don't believe it's likely to occur at a big premium when the future direction of the company is somewhat uncertain (ie. PE taking a big gamble). But you know, the more I think about the showroom effect, the more I think people have it wrong. The showroom could be a huge advantage as BBY increases it's online sales and reduces the number of big-box stores. What Amazon has, is merely a price advantage...that's it. Some of that will be mitigated by the change in sales tax rules. But what BBY will always have is a physical presence where people can see/touch and be informed about new technologies. By reducing costs over the next few years through reduction of large stores and increasing online sales and sales from kiosks, BBY, I still believe has a future. That may indeed be with (initially) somewhat declining revenues but with reduced costs, you'll still have a company with a decent bottom line. I don't believe people want to buy their technology with their food and clothing. I do believe some people want to walk into a store and have a 'geek' explain something about a technology to them or have them set things up for them. Anyways, I'm not pie-in-the-sky about these shares but I think I may just hold on to them a bit. If a big run up near 20, I'll jump ship til after the (I believe) inevitable non-buyout. I think, 11.92 was a reasonable price to pay for the future.

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    • Here is why you are wrong . When company shrink the stores size , then what will they put in it . So there goes selection . People go to BBY if it is close to them . No one drives 10 or 5 miles to go to BBY . No item requires touching any more as you get more out of reading reviews than touching it . When I see the picture of a notebook , all I am intersted in is the spec and reviews .
      Amazon just annouced they are wxpanding their same day delivery . Tell me are you willing to drive say in California to go to BBY when it takes one hour just to drive 5 miles or would you just sit at home and have the item at your door step the same or next day .

      Amazon also lowered its prices on locality where they have to collect tax .

      BBY will become something like Radioschack where people go on emergencies to buy something . Look at sales as an indicator . Online sales are increasing at doube digit rate and store sales are decreasing . Have you ever gone to a BBY store . On the week end it is like a ghost town and you can imagine what it is on week days .

      The problem is consumers are getting smart and at the same time there is no " must have " technology now or on the horizon .

      The only reason the stock is at $14.00 is because of the buy out rumore and when that gets thrown away the stock will drop in a matter of second .

      Weeks ago when David Faber said financing could not be donw, the stock dropped from $15.00 to $11.00 in 5 minutes and then came in extension . The extention will expire in couple of weeks and the day and the minute it is announced the stock will drop huge .

      • 1 Reply to leehab22
      • Since this post, I've sold 1K and bagged a nice (for me=small investor) over 4K in less than a month. If a sale happens, don't think we'll see much more than 18 or 19 bucks. If Schultze pulls out, I may end up back at square 1 with the remaining shares. Either way, they ain't going out of business any time real soon, so I can let the rest ride. Good luck to all and for me this has always been a trade rather than an investment.

    • Great minds think alike. I agree with you, but add that I think Amazon's price advantage will largely disappear because:
      1. The sales tax advantage Amazon had is going away. No more free sales tax for onliner's. States have or are closing up that loophole, they dont want to lose that revenue.
      2. Amazon sold a lot, but their margins are very low, and I dont see them keeping this up. They will inevitably (and already have, in some cases) raised their prices and the price advantage of Amazon is disappearing. They cant afford to give their stuff away forever. We saw this with Rockefeller. He cut gas prices, and, as soon as he drove his competitors out of business he raised them back up again. He could do that because he was already filthy rich, and could afford to sell at a loss for a while, only to recover it later. Amazon is not that rich and can not do it long, reminding you that BBY sells online also..and BBY's online biz is up 10%.

      Americans are not ready to give up brick and mortar stores, and there are very good reasons for this.
      Best buy is a buy.

      Sentiment: Strong Buy

      • 1 Reply to chessmaster315
      • You people keep referring to BBY as the only place to go get immediacy on electronics. That's blind, sorry. There is a reason to decrease the size of their stores. It's called too much overhead and not enough profits. DVD sales virtually gone, music virtually gone, accessories virtually gone and many other areas seriously impacted. If all that sq. ft was still working, they would keep leasing big stores and not even mention opening mobile stores. Why do you all keep talking over this fact? : )

        Sentiment: Strong Sell

 
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