I am long this company for many reasons:
I don't think the business model is dead. Does the company need to right size and get more efficient? Sure, but they can certainly do it.
BBY has increasing revenues over the last several years and are currently generating over 50B in sales. That is not easy to replicate.
BBY is profitable. Especially if you strip out non-recurring charges and the dividend. With a little work, they should be able to get their net income margin into the mid single digits. At 5% profit margin, they would generate 2.5B in profit. Even if right sizing results in lower revenue, the company is incredibly valuable at a 10 multiple, let alone a market multiple of 15.
Yes the market place is changing. But if you buy all the hype about AMZN would would sell all brick and mortar retailers. 50B worth of revenue (or close to it) like going to the store, talking to a knowledgable sales person and having some place to go quickly if the product doesn't work or is damaged. Not everyone, otherwise e-commerce wouldn't exist.
The Internet sales tax issue levels the playing field a little more.
The stock price rise was on big volume, yet is recent pull back from 16 and change has been on light volume.
All the bashing is a contrarian indicator for me. So is pumping, but there are far more bashes here.
All that said, I give the buyout a 50/50 chance I hope it happens so I can redeploy my capital but if it takes longer so be it. I think Schultze and his PE partners will make a killing taking this company public in 3-5 years.
Hollyannatexas - pls stop posting as you are reflecting poorly on us Texans!
Oh please. Forget Amazon. Quit using that as the barrier. The only growth at BBY is online. Same store sales in constant decline and ...don't you read? There are far more pumpers here than bashers with no substance, such as your post. Just stuckholders here waiting for Schulze to rescue them. Without the "buyout carrot" this thing would be below $10. The biz model is dead! They have said so, in so many words.
As far as "reflecting poorly on Texans", that's not me, that's you. Obviously, the $50B, with little profit and cash flow declining, same store sales declining, store closings, is something that gives you positivity? Embarrassing. ; /
Sentiment: Strong Sell
Holly, just a friendly reminder, you might be right and still lose money!
Re: Re: Seriously???
by hollyannatexas . Jan 11, 2013 7:45 PM . Permalink
Sorry, "stuckholder", you got a long way to go. This thing is a Dinosaur. Flat sales? Margins shrink. Matter of time. Big box done.: )
Re: Whether a buy-out or not/whether business model long term
by hollyannatexas . Feb 9, 2013 3:11 PM . Permalink
bg, First, same store sales were down almost 2% domestically off of numbers that were already in decline YOY, about 6.5% international. I don't consider that "stemmed". "Flat" in headlines very misleading.
And you are wrong on the "short": A short position at that time or especially at the point where you shorted has a higher mathematically probability of losing than a long position. Of course your "opinion" is different - why would you short it in the first place! But I am sure you have considered this:
- if Mr. Schulze makes a successful offer, shorts have to cover - period!
- keep in mind, he already had the confirmed finance for a low-ball offer ($16 - price needs to be confirmed) on Dec 14th.
- "gross margin, earnings - in line with guidance (Nov 20th)" have already been confirmed on Jan 11th - I doubt that Jan will have a massive impact on the final results to be released on Feb 28th
Again, yes, sales are not flat but a bit down and free cash flow is down by a wide margin, too! Yes, they are closing shops big time and firing people (btw, they have done this since last year summer). Yes, International Sales sucks! Yes, their previous business model is outdated (dinosaur) and have lots of unused sales space, especially in the games and DVD section. Yes, Amazon is taking away market share, however, at a reduced speed from now on. Yes, Walmart and Costco are not to be underestimated - So in the end, that sounds to me like a healthy, every-changing and very competitive retail environment - lol - Did I forget anything?
So basically you are right on all these statements!!! - BUT, the mathematical probability is higher that you lose on your short position in the end. I think there is an old saying "Don't fight the tape!";) OUR waiting will be over soon!
With all due respect, that is just stupid. He would only make money if he sold. If he sold why publicly stating he is interested in buying the company, he would face massive civil and criminal charges.
The old man will lose everything (you say stock price to zero) if he cannot pull off a buy-out.
Having said that, he would do everything he can to make it happen. It will not be $24 for sure. $19, I think it is possible. $18, more likely.
The old man has to give away more generous terms to the other guys to make it happen. What choice does he have? Don't do anything now and let the share price drop more? It is possible but after so many rounds of delay, his own credibility is on the line. And, he is old. How long can he wait?