Best Buy's 2012 Layoffs Reminiscent Of Circuit City's 2007 Layoffs [View article]
*correction to my comment above. BBY is no longer among the holdings in AdvisorShares Active Bear EFT (although I think it should be). Q2 is going to be a disaster. No, I'm not saying that because of HHGregg's early warning. I'm saying that because April, May, and what I expect are going to be horrid retail/consumer electronics sales in June. Report will release on Monday, which is why I think HHGregg made its move to report early...
Smart move to get the bad news out of the way. Now the bad news is already priced in.
BBY on the other hand will be dealing with the negative effect that every bad earnings report will have on top of the bad earnings report news it will have to release in late August.
Don't expect them to do the smart move (i.e. report early) since that would hurt Mikan's chances of being named permanent CEO.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ southpay015...
Sad is a good way to put it. The most recent structure announced by the company is another "cookie cutter" attempt to box people and employees into certain categories...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ chopchop0
I buy most of my electronics from Costco now because of the return policy. The last TV I bought from BBY was five years ago. I got suckered into the extended warranty and decided never to buy from BBY again after the company found every reason not to accept it back.
I've never been hassled for a return from Costco, despite the fact that I've never purchased an extended warranty. I'll gladly pay my executive membership for that kind of service and is the sole reason I buy everything that I can from that particular retailer.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ tkbushita,
Thanks for the read and the comment. Funny thing is, your anecdotal story is just one among legion. The stories you can find on the web regarding BBY customer service (I found many during my research) border from the sad to the comical...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ Galt Speaks,
I think the sales tax issue will impact the company but allows AMZN to make more moves now that they won't have to worry about what states it has a physical presence in.
Agree with you on the "mediocre redundancy" which is also why I think the company needs more than just the sales tax issue to survive...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ jvin248
I think your turnaround analysis is sound and in line with what most analysts believe as well. Sounds like BBY should've hired you, rather than the the guys who sold them the plan the company is currently operating under...
Hopefully the BBY management team will get their "obsolescence" refund check back for the bad advice they bought...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ jvin248,
You're spot on. So many consumers have their "Best Buy" horror stories that its become associated with the brand. The recent layoffs and the assault on employee morale will not help the company change consumer's impression of the company.
Remember, every Best Buy employee has a family and they have friends. Mikan and the management team made 4 BBY employees (and their family and friends) very happy when he gave them $10 million; but they completely pissed off a whole lot more with the recent rash of layoffs that were never properly communicated...
Best Buy's 2012 Layoffs Reminiscent Of Circuit City's 2007 Layoffs [View article]
@ rooting for jobs
1. Where is your information coming from? What source can you site to confirm that the company will be offering a "large number of new positions that are now available"? My sources are hyperlinked in the article above and I'm still waiting to hear what facts I'm referencing that are not "honest." You may not like my opinion, but this is America and I respect the fact that you don't agree with them. Calling me "dishonest" is a completely different matter though...
I can, will, and have switched from short to long and vice versa on investments based on credible information and analysis. To date, you've provided me with no credible basis or reason to change my opinion of Best Buy.
2. Even if your statement is accurate (note that I don't immediately discount the possibility that the "facts" you cite about more job openings in the company as being a lie - since I really do believe that you might have information that is credible...and if you do, I'd love to hear it so I can make informed investing decisions), it goes to my point about the current management team's inability to communicate. If Mikan took the time to communicate during the annual shareholder's meeting a message that some jobs would be cut but that other jobs would be added to conform the company to the new restructuring plan then I have no basis to write this article. Sadly he didn't, which is why I had a basis (and the facts necessary) to write the article above.
3. Why did Robert Stephens leave? His blog post discussing his decision can be found in the following link below.
I'll concede that I didn't talk to him, so my statements about him "seeing the writing on the wall" are speculation. He seems like a pretty smart guy though, and for him to come out and say that he left BBY because the company was drowning would be career suicide.
4. Lastly, I'll concede that I don't know what's going on inside the company since I'm not an insider and my opinions are based on headlines and information from the news. Most individual investors have to rely on "headlines" and information provided by the company in formulating their opinions. The fact that the company has done such a bad job of communicating shouldn't be a basis for you to find fault with my article though, should it?
Look, I'm not attacking you. Like I said, I'll go from short to long and vice versa based on credible information and analysis. What I won't do is switch positions based on buyout rumors and speculation that the company has a great plan in place for investors to turnaround the company when all I'm hearing from Best Buy is how great their Geek Squad contracts are with Grannies.com and the AARP (which by the way had to be discounted in order to provide an incentive for seniors to sign up). Yes - sadly this is the only specific part of Mikan's turnaround plan (with the exception of turning the company's footprint into RadioShack and Circuit City Express) that he's communicated since Q1.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ Jacob Morris,
Thanks for the read and the comment. I think BBY's current cash and business model still has a few years before it has to sell itself to an online retailer, but if it doesn't change course, it will have to go that route in maybe 3 - 5 years?
I agree 100% that the company needs radical change to survive.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ valueplay98,
Thanks for the read and for the comment. I promised not to a numbers analysis since another SA member indicated that they were in the middle of writing one.
To respond to your comment though, take a look at page 49 of the Circuit City 2007 annual report. The FCF for the company in 2005 and 2006 was relatively strong. In 2007 the company took a hit for an "impairment charge (page 22 of the CC annual report at footnote a). If that sounds familiar, it is because BBY took a similar hit for decisions it made with its UK partner (Carphone Warehouse), that many BBY bulls will argue are unfair when including in calculating BBY's financials for last year.
On Feb, 28, 2008 CC had about $1.76 in Cash Per Share but that dropped to $0.54 by Aug. 31, 2008.
Between 2005 - 2007, CC was also buying back stock during times of revenue growth (and increasing dividends) and as same store sales numbers were increasing. Sounds a lot like BBY right now doesn't it? The conclusion section in the article above links to a prior SA article that took the position that CC was a great stock (but bad company) because of the dividend and the stock buyback. Both seemed like they were sustainable at the time the article was published because of CC's strong financial position, but the company had to discontinue its dividend only a few months later and then went belly up shortly thereafter.
No - its not an exact or perfect comparison since the size and scale of the two companies are different, but the similarities are growing. Remember, financial statements are always a snapshot of a company's past performance. Q2 will give us a look at how BBY performed under its first full period under Mikan's leadership. It will be interesting to see how strong BBY will look (from a financial perspective then.
As an aside, I also agree that AMZN is ridiculously overvalued, and would be interested in what Pualo thinks of BBY's future.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ halflink123:
"Investors familiar with Best Buy (BBY) and who have been following the stock know how hard the company's public relations team has been trying to get investors to begin associating Best Buy's transformation plan with Apple's (http://bit.ly/pFSoX2) retail model."
It was the first sentence in the article. My comment in response to yours was: "My article above really wasn't about Apple. It was about the obsession of the BBY PR team to try to get investors to link the dying consumer's transformation plan with Apple,"
As you can see, I never said my article "didn't mention Apple". Nor was my article comparing Apple with BBY. My article WAS about why BBY's attempts to get investors to think of the company like Apple don't make sense.
The list of tickers at the top of the page don't even include Apple. They include BBY (main story) and COST, RSH, WMT, and TGT. You still seem very confused. Hopefully this comment helped to clarify your misunderstanding.
Best Buy (BBY) is down 4.5% AH thanks to hhgregg's guidance cut. The fact hhgregg's (HGG) cut was blamed on weak video (i.e. TV) sales has to be especially worrisome to Best Buy investors, given hopes that sales of TV sets, which tend to be sales-intensive, would hold up relatively well against the e-commerce onslaught. Perhaps recent manufacturer efforts to limit discounts ended up backfiring. [View news story]
At least HHGregg's investors won't be shocked during earnings. Better to control the message and announce the earnings miss early... Otherwise, BBY will end up with the layoff's fiasco that wasn't properly handled last week.
Then again, BBY will probably just figure a way to re-wicker the numbers so that the dismal sales somehow get factored into "restructuring costs."
C'mon guys - the census data for each month of Q1 this year shows that sales are down. If you prepare your investors now, at least they won't be crushed after Q2...you might also want to revise that full year guidance downward as well while you're at it. At least you'll have all the other dismal retailers figures to give you some cover.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@BuyBack King
"There is nothing wrong with BBY."
Your argument would be more cogent if you at least acknowledged some of the problems. The company's cash position is strong, but its far from having no problems.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
@ David at Imperial Beach,
Yep - like bringing a knife to a gunfight. Your point about using brick and mortar to enhance online is really the way things are heading. E-bay is implementing that model now, and your Scotttrade example highlights the future.
I suspect that Amazon will wait since BBY has plenty of cash and Amazon's showrooms are safe for now. Besides, when BBY goes belly up, Amazon will probably be able to take its pick of the litter in bankruptcy and pick up BBY's best retail "showroom" locations at pennies on the dollar. They'll probably even get all the fixtures thrown in for free.
Best Buy's 2012 Layoffs Reminiscent Of Circuit City's 2007 Layoffs [View article]
Smart move to get the bad news out of the way. Now the bad news is already priced in.
BBY on the other hand will be dealing with the negative effect that every bad earnings report will have on top of the bad earnings report news it will have to release in late August.
Don't expect them to do the smart move (i.e. report early) since that would hurt Mikan's chances of being named permanent CEO.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
Sad is a good way to put it. The most recent structure announced by the company is another "cookie cutter" attempt to box people and employees into certain categories...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
I buy most of my electronics from Costco now because of the return policy. The last TV I bought from BBY was five years ago. I got suckered into the extended warranty and decided never to buy from BBY again after the company found every reason not to accept it back.
I've never been hassled for a return from Costco, despite the fact that I've never purchased an extended warranty. I'll gladly pay my executive membership for that kind of service and is the sole reason I buy everything that I can from that particular retailer.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
Thanks for the read and the comment. Funny thing is, your anecdotal story is just one among legion. The stories you can find on the web regarding BBY customer service (I found many during my research) border from the sad to the comical...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
I think the sales tax issue will impact the company but allows AMZN to make more moves now that they won't have to worry about what states it has a physical presence in.
Agree with you on the "mediocre redundancy" which is also why I think the company needs more than just the sales tax issue to survive...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
I think your turnaround analysis is sound and in line with what most analysts believe as well. Sounds like BBY should've hired you, rather than the the guys who sold them the plan the company is currently operating under...
Hopefully the BBY management team will get their "obsolescence" refund check back for the bad advice they bought...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
You're spot on. So many consumers have their "Best Buy" horror stories that its become associated with the brand. The recent layoffs and the assault on employee morale will not help the company change consumer's impression of the company.
Remember, every Best Buy employee has a family and they have friends. Mikan and the management team made 4 BBY employees (and their family and friends) very happy when he gave them $10 million; but they completely pissed off a whole lot more with the recent rash of layoffs that were never properly communicated...
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
The opinion you're referencing is the same recipe that Circuit City used to commit corporate suicide.
Best Buy's 2012 Layoffs Reminiscent Of Circuit City's 2007 Layoffs [View article]
1. Where is your information coming from? What source can you site to confirm that the company will be offering a "large number of new positions that are now available"? My sources are hyperlinked in the article above and I'm still waiting to hear what facts I'm referencing that are not "honest." You may not like my opinion, but this is America and I respect the fact that you don't agree with them. Calling me "dishonest" is a completely different matter though...
I can, will, and have switched from short to long and vice versa on investments based on credible information and analysis. To date, you've provided me with no credible basis or reason to change my opinion of Best Buy.
2. Even if your statement is accurate (note that I don't immediately discount the possibility that the "facts" you cite about more job openings in the company as being a lie - since I really do believe that you might have information that is credible...and if you do, I'd love to hear it so I can make informed investing decisions), it goes to my point about the current management team's inability to communicate. If Mikan took the time to communicate during the annual shareholder's meeting a message that some jobs would be cut but that other jobs would be added to conform the company to the new restructuring plan then I have no basis to write this article. Sadly he didn't, which is why I had a basis (and the facts necessary) to write the article above.
3. Why did Robert Stephens leave? His blog post discussing his decision can be found in the following link below.
http://bit.ly/Nng5JW
I'll concede that I didn't talk to him, so my statements about him "seeing the writing on the wall" are speculation. He seems like a pretty smart guy though, and for him to come out and say that he left BBY because the company was drowning would be career suicide.
4. Lastly, I'll concede that I don't know what's going on inside the company since I'm not an insider and my opinions are based on headlines and information from the news. Most individual investors have to rely on "headlines" and information provided by the company in formulating their opinions. The fact that the company has done such a bad job of communicating shouldn't be a basis for you to find fault with my article though, should it?
Look, I'm not attacking you. Like I said, I'll go from short to long and vice versa based on credible information and analysis. What I won't do is switch positions based on buyout rumors and speculation that the company has a great plan in place for investors to turnaround the company when all I'm hearing from Best Buy is how great their Geek Squad contracts are with Grannies.com and the AARP (which by the way had to be discounted in order to provide an incentive for seniors to sign up). Yes - sadly this is the only specific part of Mikan's turnaround plan (with the exception of turning the company's footprint into RadioShack and Circuit City Express) that he's communicated since Q1.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
Thanks for the read and the comment. I think BBY's current cash and business model still has a few years before it has to sell itself to an online retailer, but if it doesn't change course, it will have to go that route in maybe 3 - 5 years?
I agree 100% that the company needs radical change to survive.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
Thanks for the read and for the comment. I promised not to a numbers analysis since another SA member indicated that they were in the middle of writing one.
To respond to your comment though, take a look at page 49 of the Circuit City 2007 annual report. The FCF for the company in 2005 and 2006 was relatively strong. In 2007 the company took a hit for an "impairment charge (page 22 of the CC annual report at footnote a). If that sounds familiar, it is because BBY took a similar hit for decisions it made with its UK partner (Carphone Warehouse), that many BBY bulls will argue are unfair when including in calculating BBY's financials for last year.
On Feb, 28, 2008 CC had about $1.76 in Cash Per Share but that dropped to $0.54 by Aug. 31, 2008.
Between 2005 - 2007, CC was also buying back stock during times of revenue growth (and increasing dividends) and as same store sales numbers were increasing. Sounds a lot like BBY right now doesn't it? The conclusion section in the article above links to a prior SA article that took the position that CC was a great stock (but bad company) because of the dividend and the stock buyback. Both seemed like they were sustainable at the time the article was published because of CC's strong financial position, but the company had to discontinue its dividend only a few months later and then went belly up shortly thereafter.
No - its not an exact or perfect comparison since the size and scale of the two companies are different, but the similarities are growing. Remember, financial statements are always a snapshot of a company's past performance. Q2 will give us a look at how BBY performed under its first full period under Mikan's leadership. It will be interesting to see how strong BBY will look (from a financial perspective then.
As an aside, I also agree that AMZN is ridiculously overvalued, and would be interested in what Pualo thinks of BBY's future.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
"Investors familiar with Best Buy (BBY) and who have been following the stock know how hard the company's public relations team has been trying to get investors to begin associating Best Buy's transformation plan with Apple's (http://bit.ly/pFSoX2) retail model."
It was the first sentence in the article. My comment in response to yours was: "My article above really wasn't about Apple. It was about the obsession of the BBY PR team to try to get investors to link the dying consumer's transformation plan with Apple,"
As you can see, I never said my article "didn't mention Apple". Nor was my article comparing Apple with BBY. My article WAS about why BBY's attempts to get investors to think of the company like Apple don't make sense.
The list of tickers at the top of the page don't even include Apple. They include BBY (main story) and COST, RSH, WMT, and TGT. You still seem very confused. Hopefully this comment helped to clarify your misunderstanding.
Best Buy (BBY) is down 4.5% AH thanks to hhgregg's guidance cut. The fact hhgregg's (HGG) cut was blamed on weak video (i.e. TV) sales has to be especially worrisome to Best Buy investors, given hopes that sales of TV sets, which tend to be sales-intensive, would hold up relatively well against the e-commerce onslaught. Perhaps recent manufacturer efforts to limit discounts ended up backfiring. [View news story]
Then again, BBY will probably just figure a way to re-wicker the numbers so that the dismal sales somehow get factored into "restructuring costs."
C'mon guys - the census data for each month of Q1 this year shows that sales are down. If you prepare your investors now, at least they won't be crushed after Q2...you might also want to revise that full year guidance downward as well while you're at it. At least you'll have all the other dismal retailers figures to give you some cover.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
"There is nothing wrong with BBY."
Your argument would be more cogent if you at least acknowledged some of the problems. The company's cash position is strong, but its far from having no problems.
Best Buy's Transformation - More Like Circuit City, Not At All Like Apple [View article]
Yep - like bringing a knife to a gunfight. Your point about using brick and mortar to enhance online is really the way things are heading. E-bay is implementing that model now, and your Scotttrade example highlights the future.
I suspect that Amazon will wait since BBY has plenty of cash and Amazon's showrooms are safe for now. Besides, when BBY goes belly up, Amazon will probably be able to take its pick of the litter in bankruptcy and pick up BBY's best retail "showroom" locations at pennies on the dollar. They'll probably even get all the fixtures thrown in for free.