The mission; break down the impending demise of Best Buy...
A month ago, I interviewed Lawrence audio/video icon John Kiefer of Kief’s about the sorry state of the area electronics biz and it’s uncertain future in the digital age. As a more-or-less regular guy type dude, it hasn’t been that long since stopping by a Best Buy to pick up a new Green Day or Arcade Fire CD was a normal occurence.
And holiday shopping trips were practically a must.
No mas.
I did hit Best Buy by a few months back to check out nav systems and see how they looked in real life.
Even at that, how often are people gonna go to an electronics retailer for purchases they only make every so many years? The era of pouring over DVDs and video games on a weekly or even monthly basis is pretty much over with the Walmarts and Nebraska Furniture Marts fully vested in the game.
Besides, how much longer is anybody gonna buy entertainment software anyway?
Remember when going to a CompUSA store seemed like a cutting edge thing to do? I took my kids to the one at 119th and Metcalf not too many years ago on Black Friday Eve (aka Thanksgiving) for a pre holiday sale. Two years later they were dust.
So I was hanging at Aristocrat Motors bash a couple weeks back, talking to Block & Co. honcho David Block about Best Buy. And trying to make the case that it was in shaky shape. David seemed unconvinced.
So I did some digging and found a story about Best Buy’s September earnings slide by Motley Fool, Rick Aristotle Munarriz.
"The struggling retailer can point to success in selling more appliances and mobile computing devices than it did a year ago, but the sum of its parts stinks…" Munarriz wrote. "Best Buy has fallen, and good ol’ blue and yellow can’t get up."
Munarriz went on spell out what Kiefer had been too diplomatic to put on the record.
Beginnng with the headline, "Why Best Buy Is Headed for Extinction"
"If this was just a recessionary lull, it would be easy to play the contrarian and jump on the stock," Munarriz says.
"Unfortunately, the headwinds aren’t going away. Digital distribution is here to stay, and that’s bad news for the rows of CDs, DVDs, books, and video games at your local Best Buy. The company may be perfectly fine selling you MP3 players, Web-tethered televisions, e-readers, and Wi-Fi-backed gaming systems, but these also happen to be the same weapons that wean a shopper from Best Buy itself.
"Think about that," Munarriz continues. "After you buy a portable media player, why would you ever drive out to Best Buy for a CD or a DVD when a digital download is cheaper and more convenient? These aren’t the only examples of Best Buy selling the tools that will lead to its eventual extinction."
And while Best Buy’s Internet biz was up 13 percent for the quarter, that pales to the 51 percent jump posted by Amazon.
"Best Buy is living in denial when it comes to cyberspace…" Munarriz contends. "Keep in mind that this is the same Best Buy that bought Napster and hasn’t been able to grow the music subscription service. This is the same retailer that teamed up with CinemaNow two years ago, and even Walmart’s Vudu has passed it when it comes to digital video.
"Maybe it’s just me, but when stodgy old Walmart is flicking its high beams at you because you’re driving too slow, it’s probably a good time to take the next exit off the information superhighway."
The Fool’s bottom line: "There’s no way out for Best Buy."
Kinda reminds me of when I used to come home from school in Arizona for Christmas and go shopping at Metcalf South. I’d bump into anybody and everybody I ever knew back then.
When’s the last time you went holiday or any kinda shopping at Metcalf South?
… another good one ..
Spot on, Hearne. BB is a dead man walking.
On a related note, the Kindle Fire it going to be the coffin nail for many ONLINE media businesses. The average person doesn’t have a clue how revolutionary it will be. 2012 is going to be a big year in the internet biz.
Got yours on pre-order yet?
Short it at $22.00 cover at $10.00
Hearne,
You are aware that you can make money on this? arent you?
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=bby&insttype=&freq=2&show=&time=12
Check the stock chart, and if you believe BBY is going down, short it.
Shorting IS NOT UnAmerican or a sin… it is just like buying low and selling high,
except you sell high first…and buy low later. You borrow the stock from your broker,.. no big deal…
Borrow the stock, then you sell it…. then buy it back later at $10.00… then give back the stock
BUY LOW / SELL HIGH = SELL HIGH / BUY LOW = PROFIT
You could buy PUT OPTIONS…but they most likely would expire before the disaster($10.00)
Personally, I wouldnt short BBY here…..
I would watch the chart..and when/IF it breaks this (see this chart) low of 22 ,, THEN SHORT IT.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=bby&insttype=&freq=1&show=&time=6
Giving up 4 bucks, when you are looking for $10.00-$12.00 profit, is Ok…. in case it run into Xmas optimism
dont get greedy……… bulls and bears make money, pigs get slaughtered
I say cover at $10.00 because these things always tend to bounce there…. before eventually going to single digits
Just saying….. if you believe it…… you might as well make money on it.
Customer Un-Friendly
Banging customers around eventually will put you out of biz, friends. Sometimes it takes a while, but it always happens. This bunch of scammers invented the turtle slow refund (we’ll mail it to you) and the awful restocking fees. Most of their clerks are world-class a-holes trying to be a-hole managers.
It is so weird to walk around Metcalf South now.
.
Best Buys Problems
No service. I wanted to buy a new computer, went into Best Buy and not one person would wait on me. One guy was bust texting something important, the other chatting away on his cell phone. Bought it on the internet the next day and it was at my house in another two. It’s not rocket science…
David Blockhead
What an idiot SHE is to think that Best Buy is gonna survive.
Like Circuit City before them Best Buy used to have a decent niche with car audio-video- satellite, sat-nav sales, upgrades and installation. Then they whacked all their good installers, replacing them with 15 year olds who took forever to install and in most cases never got it right. Internet was filled with complaints like sat nav turned off when I used the turn signal. Video stopped when windshield wipers were turned on.
BB offers no REAL value outside of price, maybe. Adios!
What’s important?
The whole derivatives (Wall Street’s unregulated casino) is about to implode on Eurodebt issues, Iran is gonna to get hit soon and you’ve got a sharp eye on the Best Buy survival issue because Keif’s is one of your few go to guys!
As a 14 year stock and commodities broker, I’m well aware of how shorting works.
The purpose of this story was to identify and explore an ongoing trend, not give investment advice. In a rising economy, Best Buy could well have a bounce. But the handwriting is on the wall.
Ever wake up there…you know, the next day?
Wrongo. I’ve long been an audio video electronics kinda guy and have dealt with most of the local players. It’s just that there are so few left.
And Kiefer is truly an icon in the industry. That you don’t know that, speaks to your lack of familiarity on the subject.
I’d go to Warren Buffet too if I could reach him and I was covering the range of international topics that you mention. Trust me, I’m following all of that closely as well. But that’s not what KC Confidential is about.
Yep.
Kiefs is the last man standing.
I would recommend them, and I know from whence I speak.
Um, OK
“” As a 14 year stock and commodities broker, I’m well aware of how shorting works. “”
Didnt know that….
“”The purpose of this story was to identify and explore an ongoing trend, not give investment advice. In a rising economy, Best Buy could well have a bounce. But the handwriting is on the wall””
So what you are saying is…. it best for us to not offer any ideas here, to anyone? Ummmmmm., Okey dokey.
Didn’t mean that. Shorting stocks is considered a risky investment. And buying options with the stock at its lows and maybe – maybe – the economy poised to turn at some point seems risky too.
Obviously, it could be done. I just think there are more prudent investments out there. Chances are Best Buy (like the Star) will benefit from an improved economy but the trend is downward. I just don’t think it’s going to happen quite overnight.
okey dokey
OK… cyaround
I knew BB was doomed when….
…. I saw that they started selling office supplies. Office supplies! Like a freakin’ Staples or Office Depot.