The market does not expect much from Best Buy (NYSE: BBY). The company is about to release quarterly figures. Analysts think that results will be hurt by low TV sales. Best Buy management counters that it can get buyers who have deserted it for Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST) back. Best Buy’s big problem is that it customers have gone online, not just to Amazon.com (NASDAQ: AMZN) but to the heavily trafficked websites of Wal-Mart and Target (NYSE: TGT).
Best Buy can reconfigure stores and lower prices. Those things do not help when the way that people purchase consumer electronics goes through a paradigm shift. Best Buy does not have the problem that Blockbuster or Circuit City had, but it is headed in that direction.
Best Buy may find that its only alternative to keep earnings at reasonable levels is very sharp costs cuts. Blockbuster did that too late and the consequences were disastrous. Best Buy has already forecast weak sales this year, and there is no reason to believe that will change.
The company’s revenue is about $12 billion a quarter with the normal increase in the holiday season. Its net income is barely $200 million. That margin is already too thin. An even modest drop in sales will probably drive Best Buy to a loss.
Some businesses which were a remarkable successes for a time find that their models no longer work. They have almost no prospect of re-invention when the way customers get their products has changed radically and rapidly. Best Buy is in that situation now, and management is nearly out of options.
Douglas A. McIntyre
100 Million Americans Are Missing This Crucial Retirement Tool
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.