Electronics retailer Best Buy Co. Inc. (NYSE: BBY | BBY Price Prediction) announced mediocre earnings and gave an even more mediocre forecast. It was one more example of how Amazon.com Inc. (NASDAQ: AMZN) has battered Best Buy and will continue to do so. (These companies have the worst reputations.)
[in-text-ad]
The first piece of evidence about Best Buy’s trouble is its stock price over five years compared to Amazon’s. Amazon is up 53% over the period, and the broader market is up 32%. Best Buy has dropped 3%. Best Buy’s market cap is $17 billion, while Amazon’s is $1.4 trillion.
[nativounit]
The gulf between the two companies should not be so large. Best Buy’s revenue was $9.6 billion in the most recent quarter. Net income was $274 million. In Amazon’s most recent quarter, North American revenue was $82.5 billion, with an operating income of $3.2 billion. Granted, Amazon has the highly profitable and industry-leading AWS cloud business, but that is not enough to make up for the market cap spread.
[wallst_email_signup]
The difference between the two companies remains that Best Buy is a legacy brick-and-mortar retailer. It has stores, store costs and costs for people who work in its stores. E-commerce is not part of its success, nor has it ever been. The company will be shackled to this model permanently.
[recirclink id=1206989]
Best Buy also offered caution for the months ahead. It expects revenue to decline 7.1% on comparable sales that will fall 6.3%. Amazon will do better.
Amazon Beats Up Best Buy
© Justin Sullivan / Getty Images News via Getty Images
Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
Top Gaining Stocks
Top Losing Stocks