Search results matching tag 'Best Buy'

Sony takes top spot in video games

Douglas McIntyre — Tue, 20 Oct 2009 10:53:00 GMT

Price cuts work. In September, Sony’s (SNE) PlayStation 3 outsold the Microsoft (MSFT) Xbox 360 and Nintendo Wii for the first time in recent memory.

Industry research firm NPD said that the video game industry, which includes both consoles and games, had sales of $1.28 billion in September, up 1% from a year ago.

Sony shipped 491,800 PS3 units in September, moving ahead of Nintendo’s Wii which shipped 462,800 units, and Microsoft’s Xbox 360 which dropped to third place with 352,600 units shipped.

Microsoft and Sony both cut the prices of most of their consoles by $100 in August. That helped sales of the PS3 move up by more than 100% from September 2008.

Sales of consoles are higher, but are profits?

The component costs for video game consoles have probably dropped over the last year, and certainly have dropped since the current generation of players was introduced.

But the price wars among the three major companies in the industry look eerily similar to the e-book price wars among Amazon (AMZN), Wal-Mart (WMT), and Best Buy (BBY). Price discounts may help drive up holiday sales, but the concept of losing money on every sale and making it up on volume by definition never works.

It will not be long before investors know how much price cuts have hurt the bottom lines at the three companies because they are all publicly traded. Shareholders won’t be happy if revenues for gaming move up sharply but margins fall apart.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Amazon: Phones for a penny

Douglas McIntyre — Wed, 23 Sep 2009 11:06:00 GMT

Jeff Bezos, the founder and chief executive of Amazon (AMZN), is known for being eccentric, but his new handset offer may be taking that act a bit too far. Cell phones using the AT&T (T) wireless network were selling on Amazon yesterday for one penny each. If the program is a success it is likely to come back.

The only product not available at the remarkable price is the Apple (AAPL) iPhone.

The purchase of the phone must be made with a two-year AT&T wireless subscription. The phones also come with free two-day shipping.

Amazon clearly wants to take business away from brick-and-mortar consumer electronics operations such as Best Buy (BBY) and the electronics departments at bigger retailers including Wal-Mart (WMT). In the process, Amazon’s program may take traffic away from AT&T’s own retail outlets, something the cellular carrier may not like.

The Amazon move makes one thing almost certain. The prices that consumers pay for handsets from companies that don’t have a hot product like the iPhone are going to drop, whether the customers use Sprint (S), Verizon (VZ), or AT&T as their carrier.

Amazon won’t be disclosing what it loses on every phone, but its cost to underwrite the program must be considerable. It is a case of losing money on every item and hoping to make it up on volume. That never works.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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Why Best Buy could be a bargain

Minyanville — Tue, 15 Sep 2009 17:30:00 GMT

This article is written by Minyanville's Kristen Graham

As one of the few freestanding electronic retailers left standing, I’ve found myself warming up to Best Buy (BBY) lately. See, Best Buy is a retail winner. This morning, the company released second-quarter results have further piqued my interest in the company.

The retailer missed earnings estimates as profits fell 22%. But total revenue rose 12%, boosted by the 170 new European stores it opened over the last year. And domestic sales increased 2% -- a solid figure in my mind as positive sales growth is pretty rare in the retail space these days.

More importantly though, inventory fell 6.1%, positioning the company to enter the holiday season with a lean balance sheet. And market share soared 2% as its formerly crippled rival Circuit City is no longer in operation and current competitors just don’t offer as impressive of a selection of merchandise.

Despite increased traffic flow, the average ticket fell. This comes as no surprise as consumers simply don’t have the funds to make larger purchases right now. The key point here, though, is that consumers are still going to Best Buy for their electronic needs. Sure -- they may not be making purchases as large as they once would have, but they're still going or switching to the big-box retailer when they need electronic goods.

This is important because it indicates that the Best Buy brand is still going strong. And why wouldn’t it be? It’s nearest retail outlets pale in comparison. Radio Shack (RSH) supplies a limited selection of what sometimes seems like archaic gadgets. And consider yourself lucky if you can even navigate your way to the electronics section of a Sears (SHLD) -- its stores are disorganized and cluttered.

In reality, the only competitor of Best Buy that puts up a real fight is Amazon (AMZN). The competition between the two for this year’s holiday shopping season will undoubtedly be fierce as they duke it out for shoppers' limited holiday budgets. But there's something to be said for personal face-to-face service, and that’s precisely Best Buy’s competitive advantage.

So far, the company has done well at avoiding massive promotions; the gross margin was stable in comparison to last year. And management has successfully implemented expense control. I anticipate Best Buy gaining further market share during the holidays with Circuit City completely out of the picture. At less than 17 times earnings, I think Best Buy is a company to keep your eye on as we move closer to the most critical two months of the year for retailers.

No positions in stocks mentioned

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6 reasons Best Buy wins

Minyanville — Thu, 10 Sep 2009 16:00:00 GMT

This article is written by Minyanville's Glenn Curtis

On September 15, electronics retailer Best Buy (BBY) is due out with its second-quarter numbers. And I’m here to tell you I think the shares are worth a look ahead of the announcement.

Here’s why:

1. Although the shares have certainly had a nice run since the latter part of 2008, the stock hasn’t gone straight up like some other big names out there. In fact, it seems to be hovering roughly in the $30 to $40 range, looking for some sort of catalyst. Because of this, I’m less worried about profit-taking.

Bing: What do analysts say about BBY?

2. It’s thumped the estimate the last three quarters, and I think it will beat again. Management knows this game, and it will be doing its utmost to make sure investors are left with a good taste in their mouths, post release. Incidentally, note that in the last 30 days, the estimate has edged up from $0.40 to $0.41. Not gigantic by any stretch, but still a good thing.

3. The holidays are nearing. And while I don’t think the average person is going to be spending their money on larger-ticket items like cars, vacations, or high-end jewelry, I do think they’ll spend it on simpler things for themselves and their family. Many will likely use the holiday season as a reason to replace that old refrigerator or get a new digital camera -- in other words, money will be spent on lower-priced items, which Best Buy carries. See also, Retailers in for Unhappy Holidays.

4. Target (TGT) and certainly Arkansas-based Wal-Mart (WMT) are likely to be big thorns in the company’s side in the very near-term. But Best Buy's selection, big-store base, prices, consistent advertising, and helpful salespeople will continue to lure people in the door. I don't think Target, Wal-Mart, or Radio Shack (RSH) for that matter, will be able to establish too serious a challenge any time soon.

5. It’s still got a bit to go, but if it can make a new high, it could get a lot of attention.

6. As I’m writing this, the stock is trading right about where a director bought 1,900 shares in April. That's no guarantee of success, but it does put me more at ease knowing I could hypothetically belly up at about the same price.

If you can’t tell, I’m pretty sweet on the stock. I think it could go to the mid $50 range if it hits/looks likely to hit the $3.10 estimate for next year.

No positions in stocks mentioned

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Computer hackers cost businesses millions

Minyanville — Fri, 14 Aug 2009 18:49:00 GMT

This article was written by Minyanville's Mike Schuster with additional reporting by Nico Carbellano.

This has been a high-profile week for cyber criminals. An as-yet-unidentified cyber thief made off with the identities of some 500 dewy-eyed journalism-school applicants by breaking into the UC Berkeley server. Twitter -- the inexplicably popular, profoundly useless social networking site -- was taken offline for the second time, along with Facebook, in as many weeks by the same kind of hack that took down Google (GOOG) last year. And British hacker Gary McKinnon -- accused of pulling off the biggest military computer hack of all time, to the tune of $800,000 -- lost an appeal to avoid extradition to the United States. He'll therefore be tried stateside, where we don't take kindly to this sort of thing.

Despite the scale of these network outages, they can't hold a candle to those affected by some of our more ambitious computer hackers. Click here to view 10 of the costliest cyber crimes of all time.

The business of computer hacking is certainly booming, with hack-related losses totaling a staggering trillion dollars per year worldwide. In February, Ponemon Institute conducted a survey to determine the average loss a business incurs when it suffers a security breach. Reviewing cases from 43 organizations, the group finalized a figure: $6.6 million.

Bing: Cyber criminals

While that might seem like small potatoes for megacorporations like Wal-Mart (WMT) or Best Buy (BBY) -- which experienced data leaks in 2006 and 2007, respectively -- the cost of clients' files being released into the hands of a nefarious hacker could ruin a smaller company.

Cyber crime has come a long way since Matthew Broderick (in "War Games") changed the number of days he was absent from school -- not to mention nearly annihilating mankind with an innocent game of thermonuclear war. Reports of breached security and computer virus outbreaks occur almost weekly -- even to organizations boasting the highest levels of protection.

In June 2007, the Pentagon announced a breach of the network's infrastructure that resulted in the loss of an "amazing amount" of data, according to Dennis Clem -- the Office of the Secretary of Defense's chief information officer. Although no one specified what or how much was lost, the sensitive information could have compromised national security.

No matter how protected and monitored, no security system is immune.

No positions in stocks mentioned

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RadioShack tunes to a new image

Minyanville — Mon, 03 Aug 2009 16:01:00 GMT

This article was written by Minyanville's Mike Schuster

RadioShack (RSH) -- the store you pass on the way to the pet shop window -- is on the precipice of an image overhaul. Coming on the heels of a partnership with T-Mobile (DT) to sell its phones in-store, RadioShack will press its luck on a new name.

According to Engadget, new storefront signs will read "The Shack" sometime later this year -- a move that will likely garner a cease-and-desist from Mr. O'Neal soon after.

Like KFC (YUM) dropping the "Kentucky" and equally disparaging "Fried," the chain seems to be changing its name to appeal to a younger, hipper crowd. If there's one thing today's urban youth likes most, it's pushy salespeople beside a rack of transistors and electrolytic capacitors.

The company's re-branding is part of a massive bi-coastal event taking place from August 6th through 8th and promoted on its official Web site. Dubbed "The Shack Summer Netogether," the gala will feature 14-foot laptops in New York's Times Square and San Francisco's Justin Herman Plaza streaming live video from one another. Bands and entertainers are set to perform in between games and contests.

Experts predict it will be the largest "netogether" in recent memory.

Writer Brian Heater at Gearlog surmises the re-branding might be in part of a move to larger locations -- which would mitigate its image as a primarily mall retailer. The chain also has been distancing itself from outdated electronics -- like scientific calculators and off-brand RC cars -- and focusing on laptops and HDTVs.

While removing "Radio" from its title would modernize the brand, the remaining "Shack" lends itself to the image of angry loners and survivalist militias -- groups consumers already associate with RadioShack.

And lest we forget, several Circuit City locations were renamed "The City." Didn't seem to help much.

The image overhaul seems to be a case of "too little, too late." Despite the boost in second quarter profits, the brand seemingly hasn't updated itself from the mid-80s -- appearing like a hobby shop that somehow went nationwide. From its limited selection to the uncomfortably close sales staff, RadioShack has a long way to be able to compete with Best Buy (BBY), Target (TGT) and Wal-Mart (WMT).

Then again, do those 3 Big Boxers have slightly used oscilloscopes at the ready?

No positions in stocks mentioned

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Why isn't Best Buy doing better?

Kim Peterson — Mon, 20 Jul 2009 18:47:00 GMT

Best Buy (BBY) is the last man standing. The last remaining national electronics chain, now that Circuit City and others are gone.

But is that a good thing?

The New York Times looks at the peculiar circumstances of Best Buy, a company whose future is still a question mark despite complete domination of the brick-and-mortar electronics retailing business. If you need a flat-screen television today, chances are you'll stop by (if there's a Best Buy in your town).

So why isn't Best Buy more respected by analysts? Let's look at the reasons:

The economy. Expensive electronics items aren't flying off the shelves in a recession. In fact, shipments of electronics are estimated to drop 7.7% this year, the Times reports. Best Buy's sales in its most recent quarter seem to mirror that decline.

Down sales for CDs and DVDs. Sales of music and movies were what brought people into Best Buy stores, and in many locations, those discs received very prominent center space. But people aren't buying physical discs anymore -- Apple (AAPL) surpassed Best Buy last year as the No. 1 music retailer in the country -- and Best Buy gave music and movies prime real estate for too long.

Slim profit margins. The electronics business has historically had small profit margins, and Best Buy's is around 5%, the Times reports.

Amazon. Best Buy's competition is now outside of the traditional electronics business. General retailers like Amazon (AMZN), Costco (COST) and Wal-Mart (WMT) have moved in, often beating Best Buy on prices and kicking in extras like free shipping and no tax.

No "must have." We've all got our iPods and Wiis. There is no hot item that people are flocking to electronics stores to get. You could argue that the iPhone has attained that "it" status, and though Best Buy stores do sell iPhones, Apple has done a good job of corralling iPhone sales to its own stores or AT&T (T) locations.

So what's Best Buy to do? Milk its one advantage -- a staff that knows electronics -- as best it can. It's moving the CDs and DVDs to the side and turning its center store space into a giant help desk. It's training employees to be more helpful when it comes to figuring out your computer, selling warranties or setting up a new phone.

Tough to tell if that approach will fly. That's going to hurt at the payroll level, requiring more training and employees. Best Buy is setting precedent here -- there aren't really any retail models like this out there, except perhaps the Genius Bar at Apple stores, which is an apples-to-oranges comparison.

But one of the nails in Circuit City's coffin was its decision to lay off 3,400 knowledgeable employees and hire low-paid replacements. At least Best Buy isn't going that route.

Will Best Buy survive? I don't think so, at least not in its current incarnation. There isn't much room for a niche electronics store when the Internet and other competitors continually eat away at the business.

Image credit: Ildar Sagdejev, GNU free documentation license

3 reasons Best Buy is still a best buy

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3 reasons Best Buy is a best buy

Minyanville — Tue, 16 Jun 2009 16:43:00 GMT

Here’s what I’m seeing today:

Best Buy (BBY):

The electronics chain that clearly needs no introduction released its first-quarter results before the bell this morning.

Profit was down 15%, but excluding items, Best Buy earned 42 cents per share, which was notably better than the 34 cents analysts had been figuring on.

There was a 6.2% comp-store decline, and the better-than expected earnings may have been factored into the share price; the stock is down today. That said, there are 3 positives that make it worth checking out:

1. This line from the release says a lot: “The company said it believes its domestic segment market share gains accelerated in the quarter, growing nearly 200 basis points for the 3 months ending April 30, 2009.”

2. I believe 13.9 times the current-year estimate is a reasonable valuation, given its performance and position in this space.

3. I don't sense we'll see it today, but if the company is able to ultimately slither past its current 52-week high, the stock could run to around the mid $50s or so.

All and all, I’d view a sell-off (which seems to be happening) in today’s session as a good opportunity to tune in.

Tyco Electronics (TEL):

The Bermuda-based electronic-component company was out with some good news last night after the bell: It cranked up its fiscal third-quarter outlook.

According to the release: “The company currently expects sales of $2.45 billion to $2.55 billion, versus the previous guidance range of $2.35 billion to $2.45 billion.”

“Adjusted EPS from continuing operations are expected to be $0.10 to $0.17, compared to prior guidance of $0.01 to $0.06.”

Some thoughts:

1. That’s a pretty nice bump up. With the beating the overall market took in yesterday’s session (and what looks like might be a bumpy ride this morning), I'm wondering whether investors will be paying full attention.

2. We could see estimates get a nice goose in the days ahead, which could draw some eyes (and investors) into the shares.

3. There was apparently some decent insider-buying toward the latter part of ’08, but I'd get a little confidence boost if executives would pony up right now in a big way.

4. I don’t want to be greedy here, but I’d like some more color as far as what I might be able to expect next year.

5. I realize the Street is expecting big growth from this year to next. In fact, the estimate for this year is $0.48, and it's $0.71 for next year. I just wonder if the stock -- which trades at about 40 times the current-year estimate -- may have gotten a bit ahead of itself.

I like the company. I think there's upside potential if it keeps pulling rabbits out of its hat and is able to hit the aforementioned earnings estimates. At the same time, I wouldn’t want to chase it because a stumble could send the shares seriously lower.

La-Z-Boy (LZB):

After the bell last night, the Michigan-based furniture maker came out with its fourth-quarter numbers.

Excluding items, it earned $0.07, which seemed to be light years better than the $0.11 loss the Street had been expecting.

Not to be a downer, but I don’t think now's the time to be reclining in this stock. My thoughts:

1. The Street is still expecting the company to produce a lot of red ink. (Not so attractive.)

2. Its revenue line in the quarter came in at about $284.5 million, which was short of expectations.

3. While my heart is rooting for these guys, my wallet won’t budge. Under $4 a share, I think these guys are going to have a tough time getting a really big following.

4. Why should I ante up now? According to the release: “Due to seasonality factors and plant shutdowns for vacation and maintenance, the summer period is usually the slowest for the furniture industry and, historically, our first quarter, which ends in July, is typically the weakest in terms of sales and profits."

I don’t want to kick La-Z-Boy in the pants because there was some good news to be had. But I call 'em as I see 'em, and the only La-Z-Boy I plan on getting into anytime soon is the one in my living room.

Smithfield Foods (SFD):

The Virginia-based pork processor was out with its fourth-quarter earnings, and the company lost $0.55.

My thoughts:

1. The shares trade into the mid and high teens. But given that the company's expected to earn only a small profit in fiscal 2010, I think the shares could struggle a bit in the near-term.

2. It seems an insider saddled up earlier in the year. But I’d like to see some buying activity at these levels.

3. Where’s the catalyst that’ll take this stock markedly higher in the near term?

4. When it comes to food, I'd rather rope in Kraft (KFT) or ConAgra (CAG).

Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Glenn Curtis.

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The iPod slays the record store

James Dlugosch — Mon, 15 Jun 2009 20:44:00 GMT

This weekend marked the last day of business for the Virgin Megastore chain in the United States. Like many retailers, the company has struggled during the current recession, and Sunday it shuttered its last two stores, in Manhattan and Hollywood.

Its fate, and that of most of the big chain record shops, was sealed in 2001 when Apple (AAPL) unleashed its game-changing iPod.

Why go to a store to buy an outdated CD? Digital music platforms give us the ability to download music at the click of a button. And you buy only the songs you want; online you can make your mix.

Forget about vinyl, of course. Those old LPs are the refuge of audiophiles and independent record stores, who might now carry more CDs as well. These independents are putting up a brave fight, but they're ultimately no match for technology.

In addition to all this, consumer electronics powerhouse Best Buy (BBY) and discount retail giants Wal-Mart (WMT) and Target (TGT) have contributed to the record store's demise by offering music products as impulse items at bulk-rate prices.

Add in online retail giant Amazon (AMZN), which offers downloads as well as CDs sales. Who needs to go to a store?

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Against that backdrop, expecting to make big profits in a 57,000-square-foot store like the Virgin store in New York City is pure fantasy. The real estate is worth far more than the prospect of selling CDs, DVDs or t-shirts.

I think the lesson for investors in the failure of Virgin Megastores is to avoid the dinosaur. With an industry-killer like Apple, there was never any chance for recovery.

For example Barnes & Noble (BKS) has been battling for its own survival over the years. At the moment, the company is still operating, but how long can they fight the battle? The only question left is when, not if, the company will fail.

The same is true for another giant bookseller, Borders (BGP).

These stocks may be attractive, but investors should learn from the failure of Virgin. The same can be expected of the book superstore and many other brick and mortar retailers. Online retailers, on the other hand, still have plenty of room for expansion.

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Wal-Mart hiring binge will add 22,000 jobs

Douglas McIntyre — Thu, 04 Jun 2009 10:37:00 GMT

Many big-box retailers, including Best Buy (BBY), Target (TGT), and Costco (COST), are struggling as the recession beats down their same-store sales. General retailers such as Sears (SHLD) are not faring any better. That means that the layoffs in the retail industry, which have already been extensive, are likely to continue, especially if the 2009 holiday season is weak.

Wal-Mart (WMT) is at the other end of the spectrum, by itself. The world’s largest retailer says it will add 22,000 jobs at its U.S. stores this year. That is down slightly from 2008, but in an economy that is forcing hundreds of thousands of people out of work each month, it is extremely impressive.

Investors in Wal-Mart have begun to voice concerns that the company will lose some of its new customers when the economy recovers. These customers will go back to retailers who cater to the middle classes. They will not be forced to go “downscale” to do their shopping. This analysis may miss the fact that the consumer who was forced to be frugal when pressed to keep expenses down due to the recession will decide to open his wallet as things get better. Analysts who follow the car industry believe that consumers will never go back to buying a new vehicle every year. The same probably holds true for most consumer spending. American frugality could last for a decade.

Wal-Mart is often criticized for paying its workers too little money and preventing them from forming unions. These charges may be true, but it is also true that Wal-Mart is one of the few large U.S. companies contributing to an improvement in national employment.

Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.

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