The retail chain’s stock price is up more than 6% in pre-market trading after it beat the Street’s earnings estimates in its report on the otherwise dreary quarter. Best Buy generated net earnings of $294M in the three months ending February 1, up from a $379M loss in the same period last year, on revenues of $14.5B, -3%. The revenue number was lighter than the $14.7B that analysts anticipated. But adjusted earnings from continuing operations of $1.24 a share beat expectations for $1.01. CEO Hubert Joly had the good grace not to celebrate the results from a quarter where cost cuts compensated for declining traffic, intense price competition, and — with an unusually late Thanksgiving — fewer shopping days than Best Buy had in 2012. With sales down 1.2% at domestic stores open at least a year, the company “cannot be satisfied” with its performance, he says, as it continues with his Renew Blue campaign to stabilize the electronics chain that has struggled to keep up with online competitors led by Amazon and big box retailers led by Walmart. “Our Renew Blue transformation is a multi-year journey, and while it is off to an encouraging start, it is still in the early stages.” In Q4 entertainment software accounted for 11% of total domestic revenues, down from 12% last year, while consumer electronics fell to 32% from 33%. But computing and mobile phone products picked up the slack, increasing to 46% …
UPDATE, 2:43 PM: The company could add as much as $40 to the current $79 annual fee, CFO Tom Szkutak told analysts in a conference call to discuss earnings. While no decisions have been made, he and other execs say that the current price has been in place for nine years. Over that time delivery and other costs have risen.
PREVIOUS, 1:11 PM: Maybe Amazon will need its drones because the Q4 earnings report it just released failed to deliver, at least as measured by Wall Street’s optimistic expectations. The stock price is down 9%+ in post-market trading after the e-retailer reported net income of $239M, up 146% vs last year’s Q4, on revenues of $25.6B, +20.3%. That missed analysts’ target for revenues of $26.1B. Earnings at 51 cents a share also fell short of predictions for 66 cents. It looks like Amazon’s electronics sales were hit harder than many anticipated from the holiday season price war waged by Best Buy and big box retailers including Wal-mart. Sales in the electronics and general merchandise category were up 23%, a slower pace than last year’s 28%. Media sales grew 11% worldwide, up from 8% last year, and in North America they rose +21%, up from 13%. The company says that it had a “record setting holiday season” for Amazon Prime, the $79 a year service that wipes out delivery charges for many …
The Dow Jones U.S. Media Index fell nearly 2% today as Wall Street dealt with the biggest single-day stock selloff it has seen since June. The benchmark Standard & Poor’s 500 fell 2.1% as investors bailed out of stocks and currencies from emerging markets including China, South Africa, and Turkey. All Big Media companies lost ground today with Disney (-2.8%) followed by Viacom (-2.5%), CBS (-2.2%), News Corp (-2.2%), Time Warner (-2.0%), Fox (-1.5%), Discovery (-1.4%), Comcast (-1.3%), and Sony (-0.4%). In the broader group of companies that we track, big losers included New York Times (-5.5%), DreamWorks Animation (-4.3%), Best Buy (-4.0%), Facebook (-3.9%), Yahoo (-3.8%), Google (-3.2%), and Pandora (-3.2%). Only a handful of companies advanced including SFX Entertainment (+2.7%), RealD (+0.8%), and Regal Entertainment (+0.5%). Two stocks that have been rising of late touched new 52-week highs during the day: AMC Entertainment (which closed +0.5%) and World Wrestling Entertainment (+0.4%).
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom take up Charter Communications’ $61.3 billion bid for Time Warner Cable; the potential impacts of an appeals court ruling throwing out FCC net neutrality rules; a stalling home-entertainment industry and Best Buy’s bad holiday. They also look at the surprising shakeup at the top of Yahoo, coming as it does just a week after the company’s big CES shindig. Now at least one much ballyhooed hire departs 15 months later after arriving and there are reports that at least another top executive is out.
The stock is down 27.6% in early trading following a company report showing that its efforts to match the prices of competitors including Wal-mart and Amazon backfired over the holidays. Sales at stores open at least a year fell 0.9% in the nine weeks ending January 4; they had been flat in the same period last year. Total company revenues fell 2.6% to $11.45B. Domestically, declines in sales of cameras, DVD and Blu-ray discs, and MP3 players outweighed increased spending for computers, appliances, and gaming. The weak results mean that Q4 operating income likely will come in as much as 185 basis points below last year’s, CEO Hubert Joly says. He says there’s a silver lining: By matching prices from online rivals, and improving the shopping experience, Best Buy saw “a market share gain in an industry that NPD says declined 240 basis points during the holiday period.” The chain’s online sales were +23.5% vs last year. That leaves the retailer “well-positioned as we enter fiscal 2015.” Investors had high hopes for Best Buy. Its stock price appreciated 156% in the 12 months ending yesterday, before the disappointing news.
Shares in the streaming video company appreciated 297.6% during the latest 12 months, well ahead of everyone in the companies we track — including media industry giants, where CBS (+67.5%) led the pack. But you shouldn’t hear many complaints. The Dow Jones U.S. Media Index rose 12.3% in Q4, and 47% for the entire year, as investors became increasingly comfortable about the prospects for information and entertainment companies in a period of strengthening ad sales, low interest rates, and prodigious stock repurchases and dividend payments. The sector was well ahead of the benchmark Standard & Poor’s 500, which was up 9.9% in Q4 and 29.6% for the year. Big Media companies will look back at the year fondly. After CBS, the top performers were Viacom (+65.6%), Sony (+54.4%), Disney (53.4%), Time Warner (+45.8%), Discovery (+42.4%), Comcast (+39.1%), and Fox (+37.9%). But lots of other companies did much better. Industry winners after Netflix include Best Buy (+236.5%), Pandora (+189.8%), Sinclair Broadcasting (+183.1%), DreamWorks Animation (+114.2%), and Live Nation (+112.2%). The year’s underperformers include RealD (-23.8%), Barnes & Noble (-0.9%), Apple (+5.4%), and TiVo (+6.6%).
A week after its biggest competitor’s successful launch, Microsoft rolled out its own next-generation video game console, the Xbox One, in a midnight party in Hollywood amid hundreds of gamers and a fair smattering of rappers, actors, YouTube personalities and other celebrities of varying wattage. The Xbox One is $100 more expensive than Sony’s PS4 at $499, but more technically capable thanks to included motion, face and voice sensors. Sony’s console sold 1 million units on its launch day a week ago. Both companies will be fighting for consumer attention this holiday season, which kicks off officially in one more week.
At last night’s event at the Milk Studios in Hollywood, as electronic dance music star Deadmau5 and other DJs spun on a stage, the company showed off its biggest games — including some 22 titles exclusive to the platform — to fans who played for hours ahead of the machine’s first official sale at 12:01 AM. But all the night’s noise obscured Microsoft’s broader push, which is that the machine can integrate all kinds of entertainment while easing access to them all. One of the machine’s niftiest tricks is a slick and relatively reliable ability to seamlessly switch between, or even simultaneously watch/use/play, a TV show, the Internet and a game with virtually no delays. The device’s sensors can recognize when a person has sat down in front of it, and automatically open up that person’s customized interface on screen. It can even do so for more than one person at a time. Voice and gesture commands work pretty well, though many reviewers have said the gee-whiz tech isn’t reliable enough yet to completely replace using a hand controller to navigate.
When they introduced the console six months ago, Microsoft reps talked up new kinds of interactive programming being created by Microsoft Studios under former CBS honcho Nancy Tellem. But last night only games were on display. They didn’t even demonstrate the offerings for fantasy football as part of their new deal with the NFL.
This is good news for consumers, but not so much for the electronics retailers who plan to engage in a dogfight for market share when it comes to selling smartphones, tablets, TV sets and other gadgets. Walmart said this morning that it will “match select Black Friday offers from Target, Toys R’ Us and Best Buy” beginning Friday — a week ahead of the traditional post-Thanksgiving sales. And Best Buy shares are down 10.6% so far today after it warned investors that its pricing plans will “have a negative impact” on profit margins in Q4. “We will not be shy about investing in winning the holiday season,” CEO Hubert Joly said. The warning “spooked investors,” says B. Riley analyst Scott Tilghman, who trimmed his Q4 forecasts for the chain. Retailers are antsy because Thanksgiving — celebrated the fourth Thursday in November — appears this year on the latest possible date. “With six fewer days from Thanksgiving to Christmas, the retail environment is more competitive than ever,” said Mac Naughton Duncan, Walmart’s U.S. Chief Merchandising and Marketing Officer. Walmart’s move follows Sears and Kmart’s announcement that they’ll begin their sales a week early. More than half of retailers will start their holiday promotions at least five days before Thanksgiving, the National Retail Federation said last week. Many stores also are cutting prices to compete with online retailers including Amazon. The retail trade group says its surveys show that …
Markets registered their best single-day gains this year as President Obama met with House Republicans this afternoon to see whether they can reach an agreement to raise the federal debt ceiling and avoid a default. The Dow Jones Industrial Average and Standard & Poor’s 500 ended the day +2.2% while NASDAQ was +2.3%. Media companies fared better with the Dow Jones U.S. Media Index +3%. Time Warner topped our Big Media list, hitting a 52-week high before closing +4.2%. It was followed by CBS (+4%), Disney (+3.1%), Comcast (+2.3%), News Corp (+2.1%), Fox (+2.1%), Liberty Media (+1.9%), and Viacom (+1.1%). Sony slid 0.9%. Other big winners today included Best Buy (+7.6%), Liberty Interactive (+7.2%), Time Warner Cable (+6.1%), and Netflix (+5.4%). The only big loser among noteworthy media companies was a newcomer: SFX Entertainment, entrepreneur Robert F.X. Sillerman’s latest initiative which hopes to capitalize on electronic dance music. It went public this week at $13 a share but has fallen in its first two trading days — closing today at $11.20, -5.8%.
President Obama warned this afternoon that the economy could head toward a “very deep recession” unless lawmakers agree to raise the debt ceiling soon. Many investors seem to agree: With lawmakers unable to agree on terms of a potential deal, several are cashing out recent gains to sit on the sidelines until they have a clearer sense of where things are headed. The Dow Jones Industrial Average fell 1.1% today, while the Standard & Poor’s 500 was -1.2% and NASDAQ -2%. Media and tech stocks also took a hit with the Dow Jones U.S. Media Index falling 1.5% today. Sony (-3.3%) was hardest hit among Big Media companies followed by CBS (-2.4%), Viacom (-2.1%), Fox (-2%), Liberty Media (-1.7%), Comcast (-1.1%), Time Warner (-1%), Disney (-0.9%), and News Corp (-0.7%). Among the broader field of companies we watch, Pandora (-7.8%) dropped most. Others licking their wounds include Cumulus (-7.1%), Facebook (-6.7%), Netflix (-5%), RealD (-4.6%), Lionsgate (-4%), and Best Buy (-3.6%). A few companies managed to eek out modest gains led by Redbox owner Outerwall (+6.2%) which is still benefiting from the recent disclosure by activist investor Jana Partners that it has bought a big stake in the company and wants changes in strategy that will pay off for shareholders.
This was the quarter when Facebook left behind memories of its troubled IPO last year: As it reassured investors that it has a strategy to sell ads on mobile platforms, its shares closed Q3 at $50.23 — a 101.9% gain since the end of June. That’s the biggest jump on the list of media company stocks we track. The sector did well as the economy, and advertising, improved: The Dow Jones U.S. Media Index rose 8.3% beating the Dow Jones Industrial Average (+1.5%) and Standard & Poor’s 500 (+4.7%). Radio company Cumulus Media came in second in our group, rising 56%, followed by Netflix (+46.5%), Best Buy (+37.2%), Pandora (+36.6%), and Yahoo (+32%). Among Big Media companies, Viacom (+22.9%) saw the biggest improvement followed by Time Warner (13.8%), CBS (+12.9%), Comcast (+8.1%), Disney (+2.1%) and Sony (+1.7%). We left Fox and News Corp off the list for this quarter; their stocks were essentially brand new after Rupert Murdoch’s company split in two at the end of June. Companies that probably were glad to see the quarter end include 3D technology company RealD (-49.6%), Barnes & Noble (-19%), Rovi (-16.1%), and Outerwall — the parent of DVD rental kiosk owner Redbox — which was -14.7%.
Google clearly caught the public’s imagination on Wednesday when it introduced Chromecast – the $35 dongle that can turn any TV with an HDMI port, and access to Wi-Fi, into a smart TV. Plug it in, and you can access YouTube, Netflix and other media, including music and photos from your computer, phone, or tablet. The device is already sold out on Google Play, Amazon, and Best Buy. (You can find it for about $45 on eBay, though.) And Google has exhausted its allotment of promotions that gave early Chromecast buyers three months of Netflix for free. So is Google’s new product worth all this excitement? Several critics who have tried it say that it is — but mostly because its cheaper than alternatives such as Apple TV and Roku. It “works as advertised, and it makes me feel like I’m a little further into the future,” The Atlantic’s Alexis Madrigal says. ”For $35, that’s a good deal.” Wired’s Mat Honan says that images don’t show that Chromecast needs to draw power from either a USB port or an outlet. Still, he’s “pretty blown away by how easy, versatile, and inexpensive this is. Given the low, low price … it’s really hard not to like.”
This may be the biggest surprise for Hollywood in Google‘s event today to unveil new products and software. The two-inch long Chromecast plugs into a TV set HDMI port, enabling users to watch videos from YouTube, Google Play, and Netflix and handle music and photos. (A Pandora app is on the way.) If it works as promoted, it would offer people an easy way to watch Web videos on TV without having to connect a box such as a game console, Blu-ray player, or Roku. Chromecast also comes with a three-month free trial to Netflix. With its small size the Chromecast “simply disappears behind your TV,” Google’s Rishi Chandra says. The device connects with the home Wi-Fi network, so you don’t need to tie up a computer, mobile phone or tablet. “We bring the highest resolution directly from the cloud instead of relying on your device to push the content,” Chandra says. But you can also use those devices to serve as remote controls, for example to pause the video or adjust the volume — which you can do without unlocking. And it will work with other companies’ devices, including Apple iPhones. “YouTube on TV becomes simple and intuitive,” the exec says. Google hopes that at the $35 price people will buy a Chromecast for each TV set. The company says the device will be available today on Amazon, BestBuy.com and Google Play, and will hit Best Buy …
Investors who bet on media should have warm memories from Q2. The Dow Jones U.S. Media Index rose 6.0% in the quarter vs. the Standard and Poor’s 500 which was +2.4%. Sony led the Big Media pack with its share price rising 21.8% in the quarter. It was followed by Disney (+11.2%), Viacom (+10.7%), News Corp (+6.8%), CBS (+4.7%), Time Warner (+0.3%), and Comcast (-0.5%). More broadly in media, TV station owners were among the biggest winners led by Sinclair (+44.8%) and LIN (+39.2%). Others that paid off in the quarter include DreamWorks Animation (+35.3%), Pandora (+29.9%), E.W. Scripps (+29.6%), Live Nation (+25.3%), and Best Buy (+23.4%). While most gained, the sector had a hodgepodge of losers including newspaper publisher McClatchy Co (-21.4%), TiVo (-10.8%), Apple (-10.5%), IMAX (-7.0%), AOL (-5.3%), Cinemark (-5.2%), and Discovery (-1.9%).
This was the market‘s worst day since 2011, with the Standard & Poor’s 500 -2.5% and the Dow Jones Industrial Average -2.3%. Traders became jittery after Federal Reserve Chief Ben Bernanke said that the economy might be strong enough for the agency to pull back on its purchase of bonds, part of its strategy to stimulate spending. Media companies felt the chill wind, with the Dow Jones U.S. Media Index falling 2.9%. Disney, -3.7%, was hardest hit among Big Media companies. It was followed by Comcast (-3.3%), CBS (-3.0%), News Corp (-3.0%), Time Warner, (-2.7%), Viacom (-2.4%), and Sony (-2.2%). Other media companies that suffered today include LIN TV (-6.6%), Cinemark (-5.0%), Pandora Media (-4.7), Sinclair Broadcast Group (-4.4%), Best Buy (-3.9%) and Netflix (-3.8%). The handful that gained ground today included RealD (+0.7%) and Carmike (+0.5%).
The so-called store-within-a-store at Best Buy will offer Windows-based tablets and PCs, phones, Microsoft Office software, and Xbox consoles, the companies said today. Between this month and September the retail chain plans to allocate as much as 2,200 square feet of space at 600 U.S. and Canadian outlets to what will be called the Windows Store. These spaces will provide “a large-scale, hands-on customer experience that will show customers how Windows and Microsoft devices and services can make it easier for them to work and play,” Microsoft’s Tami Reller says. Best Buy will add more than 1,200 Microsoft-trained sales people at the Windows Stores. Microsoft also will have a presence on Best Buy’s Web site. This initiative follows the retailer’s agreement in April to launch similar internal stores for Samsung products as part of Best Buy’s effort to regain some of the market share it has been losing to online stores led by Amazon.
The Labor Department’s estimate that 175,000 people joined U.S. payrolls last month had something for everybody: It was strong enough to show that the economy is improving — but not sufficiently encouraging to exacerbate fears that the Federal Reserve might curtail its stimulus efforts. The market responded with the Standard & Poor’s 500 rising 1.3% for the biggest two-day rally this year. And media stocks recovered from a downdraft earlier this week; the Dow Jones U.S. Media Index appreciated 1.9% today to end the week +1.3%. Sony led the Big Media pack, with shares +3.2% today. It was followed by Disney (+2.7%), Comcast (+2.3%), Viacom (+2.3%), Time Warner (+2.2%), and News Corp (+1.1%). CBS was the only decliner, -1.7%.
Amazon’s had a big advantage competing with Best Buy‘s Web site: It seemed to be caught in “a 10-year time warp to 2002,” the retail chain’s global e-commerce and marketing President Scott Durchslag confessed in a remarkably frank presentation this afternoon to investors attending the Goldman Sachs dotCommerce Day. That’s about to change. Best Buy, which has 1B online visits a year, is “catching up to where the site should have been.” For example, the search engine has been overhauled to find exactly what the consumer wants, not something similar. The mobile app will tell people where to find the closest store, and what deals it offers. Best Buy also will create a a virtual currency that gives visitors points if they do things such as write a review or post a purchase to Facebook. The company plans to offer opportunities for people to read reviews written by friends anywhere on the Web, not just at the Best Buy site.
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