One financial guy's take on Best Buy stock

[Bob Andrews]

I've made no secret of the fact that I'm a huge Best Buy fan, but I'm also a fan of good investing. Thought Malcom Berko's take on Best Buy was... interesting:

http://www.goerie.com/article/2012301119937

I'm not sure I agree with his 'sell' advice, but then I don't currently own any BBY stock. What do you think? And, what do you think, JDP- buy, sell, or hold?

[Packard53]

If you like wasting your money then purchase Best Buy stock. They are in big trouble along with Sears and Barns & Noble the book store chain.

John S.

[JDP]

If you like wasting your money then purchase Best Buy stock. They are in big trouble along with Sears and Barns & Noble the book store chain.

John S.

Best Buy has maybe 5-10 years left without some major changes like downsizing. My store is way too big for all but Nov, Dec and needs to sublease some space to Starbucks or McDonalds for example. Marginal stores need to be closed, we need more vendor supported sub stores like the Apple section. We may survive just by having vendors pay for space to show off product to order off our web site or the competitions. i.e. we already compete against our own web site, for example a $2500 TV in the store is $2000 on the Best Buy web site and we'll price match it.

[sweetolbob]

If you like wasting your money then purchase Best Buy stock. They are in big trouble along with Sears and Barns & Noble the book store chain.

John S.

I just recorded a program (2012 vintage) on CNBC that discusses the future of Best Buy with expansion into other countries and how it will become more efficient in the US market. I will comment after I watch it in the next few days.

Bob

[Packard53]

Folks I am just going by an article that was on MSNBC web site this week stating that all three I named in my first post are in very deep trouble.

John S.

[JDP]

Folks I am just going by an article that was on MSNBC web site this week stating that all three I named in my first post are in very deep trouble.

John S.

Not in deep trouble yet, we're still making money and have billions in assets.

[Packard53]

JDP: The reason that I say that Best Buy is in very deep trouble please go to Forbes.com look for an article titled Why Best Buy is going out out of business gradually. The article dates from1/02/12 and is written by Larry
Downes. Since March of 2011 Best Buy's stock value has gone from $35.00 a share to a low of around $20.00 a share in November of 2011 which amounted to 40% decrease in value in less than a year. Right now the stock closed at about $25.00 a share

John S

[okc63avanti]

Not in deep trouble yet, we're still making money and have billions in assets.

Guys buy Best Buy Stock ..... they have JDP working for them now and his great sales records will be reflected in 4Q 2011 quarterly reports bumping the stock price.

After all JDP has been selling Studebakers for almost 50 years since the factory was shut down, surely his sales abilities on products still being manufactured or even greater !!!

Hang in there John ...

[JDP]

Guys buy Best Buy Stock ..... they have JDP working for them now and his great sales records will be reflected in 4Q 2011 quarterly reports bumping the stock price.

After all JDP has been selling Studebakers for almost 50 years since the factory was shut down, surely his sales abilities on products still being manufactured or even greater !!!

Hang in there John ...

Maybe if they could find enough real professional sales help willing to work for say $15/hour they'd be in great shape. I did manage to be the highest grossing sales person in the store already, but my competition is maybe 80 kids and and a dozen over 30's and they make a lot less.

[Gunslinger]

There seems to be a big difference in work ethic between the generations. My Dad taught me what his Dad taught him...always give back $1.25 in value for every $1.00 you earn. That's how companies grow and how you grow your own future.

Far too many today have lost sight of that...in management and in the work force.

Kudos to you, JDP. Keep showing them how it's done.

[58PackardWagon]

BBY is right in my back yard. I have called on their Corporate Office many times selling my services. First take on the headquarters.....what a waste of space. As for their stores, they can no longer compete and they have run their course. The internet will put them under in a short period. Their own suppliers undersell them on the internet. Why would I buy a TV at BBY when I can buy one from one of their suppliers for a couple hundered dollars less? BBY is good for looking at the TV and for setup. The same goes for other products. Again their concept has run its course.

[JBOYLE]

My store is way too big for all but Nov, Dec and needs to sublease some space to Starbucks or McDonalds for example.

In our town, Best Buy is in a large shopping center along with Staples, PetSmart, ect. The center has had two major tennents go under, Barnes and Noble and Bed, Bath and Byond. I'd bet Best Buy pays less for their space than the Apple store downtown. It's 1/20th the size, but is in a high priced mall. I'd think they should get a pretty good lease on the space..or do they buy it?

The biggest threat to Best Buy here is a local dealer with 3 stores. He's been around for 60 years and has just expanded from his original location downtown by taking over a former furniture store space in a new strip mall. He's kept up with the times and has a healtly internet busines with what looks to be locally produced videos of a store expert talking an demonstrating the piece you're interested in. He backs that up with a good amount of regional TV/newspaper ads.

[556063]

All retail related stocks will have an element of risk associated with them as long as consumer sentiment remains so deeply depressed. One must keep in perspective, what happens at a local level often has little to do with the national climate that has everything to do with stock price. For example, our local K-Mart does well and has survived all the downsizings to date, (even the most recent), while a Staples that opened a few years back here didn't even survive to it's first anniversary. On a national level, the picture is completely opposite.

Tracking Best Buy, I'd keep and eye on what is going on with appliance and electronics manufacturers in general. Whirlpool located close by in Benton Harbor, MI continues to shrink. Competition from foreign manufacturers continues to get more intense. And, housing starts are still worse than any time since WWII. There's a general trend of weakness in home appliances that may be around for years.

The problem Best Buy has with the rest of it's offerings is that competition comes from so many other full line retailers. Many of the small electronics I've bought have been impulse buys when on a shopping trip for other stuff, for example.

If the market recovers quickly at some point soon, Best Buy may be positioned uniquely well to profit from it. It's a matter of survival today. Hang it out long enough, and you may be a winner.

Sears holds or controls a tremendous amount of prime commercial real estate. That is what finance guys like long term about the company. Even if they don't operate the stores on the properties in the future, they stand to do well when the market recovers.

I tend to think appliances will always be sold out of retail locations for the most part. People will want to touch and feel before they buy. Just like the automobile business.