The electronics and entertainment retailer’s investors seem to like the new plan to create Samsung Experience Shops at 1,400 Best Buy and Best Buy Mobile stores beginning this month. Best Buy shares are up about 8.7% in early trading, flirting with their 52-week high. The companies say that about 900 of the Samsung shops will be open by early May with the rest to be up by early summer. They’ll feature smartphones, tablets, laptops, connected cameras and accessories. Taking a page from Apple’s retail playbook, Samsung says it will have dedicated salespeople who will help with demonstrations and support customers “throughout the lifecycle of their product.” The collaboration will also exist online later this quarter with a destination on the Best Buy site for sales and service of Samsung products and accessories.
UPDATE, 9:10 AM: Best Buy founder Richard Schulze says in an SEC filing that the company rejected an offer that he made with support from “up to three leading private equity firms.” Although his effort might have helped to return the chain “to its position of market leadership,” he now believes Best Buy “deserves a chance to implement its own plan.” The owner of about 20% of the company’s stock “has not made any determination” about whether he will exercise his right to appoint two candidates to the board. “No one is more interested in the success of the Company than Mr. Schulze,” the filing says.
PREVIOUS, 6:39 AM: The stock is up 2.8% in early trading as investors adjust to the likelihood that Best Buy will continue to operate as a publicly traded company. The chain confirmed this morning that founder Richard Schulze did not submit a bid by the February 28 deadline. As a result it “will continue to focus on its transformation for the benefit of all its shareholders.” Best Buy’s earnings for the quarter that ended on February 2 apparently compensated for any disappointment, The company reported a net loss of $409M, an improvement from the $1.8B loss a year ago, on revenues of $16.7B, +0.2%. The top line beat analysts’ expectations for $16.3B. And adjusted earnings from continuing operations, at $1.64 a share, topped forecasts for $1.54. Best Buy says that domestic revenues, at $12.6B, fell 0.3%. The closing of 49 big box stores was “substantially offset” by a 0.9% growth in same-store sales as well as the addition of 129 Best Buy Mobile stand-alone stores. Domestic online sales were up 11.2% to $1.3B. Demand for mobile phones, tablets and e-readers and appliances exceeded the drop in sales for game consoles and digital cameras. Sales of DVDs and other entertainment continued to decline; they accounted for 12% of domestic revenues, down from 15% a year ago. On a same-store basis, entertainment sales declined 18.9%.
This week, Deadline Executive Editor David Lieberman and host David Bloom discuss economic studies suggesting that movie moguls really are being rational when they favor a good story and dependable director over lots of big stars; what’s happening with Richard Schulze’s efforts to buy back Best Buy, the struggling big-box retailer he founded; and whether Netflix should be worried about streaming service Redbox Instant now that it has announced a price point and content providers.
The stock is up about 15% this morning after the Minneapolis-based company’s home town paper, the Star Tribune, reported that founder Richard Schulze will make “a fully financed offer” of as much as $6B for Best Buy ”by the …
Listen to episode 11 of our audio podcast “Deadline Big Media, with David Lieberman.” This week, Deadline Executive Editor David Lieberman and host David Bloom discuss why Facebook is winning back some friends on Wall Street; why Big Media companies are going batty for baseball broadcast deals; how Black Friday may not be enough to pull Best Buy into the black, and what it may mean for Hollywood; and how the fall of Rise Of The Guardians in its opening weekend box office may be a challenge for DreamWorks Animation.
The stock price is down about 5% in pre-market trading after the consumer electronics and home entertainment retailer unveiled results that CEO Hubert Joly says were “clearly unsatisfactory.” Best Buy reports a net loss of $10M for the quarter that ended on November 3, down from a $156M profit in the period last year, on revenues of $10.75B, -3.5%. The revenue figure is just a hair ahead of the $10.73B that analysts expected. But the 4 cent net loss per share for continuing operations contrasts with the Street’s expectation for a 12 cent profit. Even without its previously announced restructuring charges — mostly for store closures — EPS would just be 3 cents a share. Best Buy says that sales at domestic stores open at least a year fell 4% with declines in notebook computers, gaming consoles, digital imaging, and television sets. The company believes that notebook and tablet sales were hurt as consumers waited for what it calls “major product launches” including Microsoft’s Windows 8 operating system. The slide at the bricks-and-mortar stores outweighed a 10% gain in online sales to $431M. Mobile phones, appliances, and tablets and eReaders were especially popular with online shoppers. All together, revenues for the domestic store unit fell 4.7% to $7.67B as operating income dropped 94% to $16M.
Best Buy warned late today that earnings and same-store sales would be lower in its third quarter that ends November 3. The electronics and entertainment software retailer also said the head of its U.S. business Mike Vitelli will …
Best Buy reported second quarter earnings Tuesday morning with net income down 91% to $12M, widely falling short of Wall Street estimates. Revenues were $10.55B, down 3% on the same period a year ago as bricks & mortar …
2ND UPDATE, 5:53AM: Best Buy has officially announced the appointment of turnaround expert Hubert Joly as president and CEO, replacing interim CEO G. Mike Mikan. In a statement this morning, Best Buy board chairman, Hatim Tyabji, said: “Hubert’s range and depth of experience in transforming companies is exactly what the company needs at the moment, as is his energetic, imaginative and experienced leadership in executing strategies.” Joly will also join the company board.
UPDATE, 1:05AM: Amid the back-and-forth over Richard Schulze’s bid to acquire the struggling Best Buy, the company has found a new CEO in Frenchman Hubert Joly, The Wall Street Journal reports. Joly resigned as chief exec of global hospitality and travel company Carlson on Sunday. According to The Journal, Joly has been successful at turning around media and technology companies including a restructure of Vivendi’s videogame business. He is expected to take up his post in September. Best Buy will report earnings tomorrow and is expected to further outline its own turnaround plans at that time.
PREVIOUS: Last week, Best Buy founder Richard Schulze urged the company’s board to allow him to proceed with his effort to take the consumer electronics chain private at a valuation of about $8.8B. Yesterday, Best Buy said the board offered Schulze an opportunity to conduct due diligence and pursue his interest, but that Schulze declined to participate.
Richard Schulze made the plea in a letter he sent today to the board. It seems to be part of a PR campaign to rally shareholder support for his effort to take the consumer electronics chain private — in the hope that investors will pressure the board to cooperate with him. “I am deeply concerned about the direction of the company and, as Best Buy’s largest shareholder, I cannot simply stand aside,” he says. Last week Schulze, who controls 20.1% of the equity, said he was prepared to offer as much as $26 a share for the company, roughly $8.8B. (It closed yesterday at $19.36.) Schulze says today that the board dismissed his offer as a “highly conditional indication of interest” and hasn’t allowed him to form a group of private equity firms and lenders that could look at the books to solidify their offer. “I still hope to work with the Board on a mutually beneficial transaction – but you should know that I am not going away,” Schulze writes. “All I am asking is your permission to conduct due diligence and form a group so that I can quickly be in a position to give the Board a fully financed offer for your consideration.” Best Buy is incorporated in Minnesota, and the laws there make it virtually impossible for someone to acquire a company if the board opposes it.
The stock price tells the basic story. If investors believed that Best Buy founder Richard Schulze was likely to succeed with the plan he unveiled yesterday then the company’s shares would be trading close to his proposed offer of as much as $26 a share. Instead they’ve settled in at about $19.90. One reason for the doubt: Best Buy is incorporated in Minnesota which sets an unusually high bar for hostile takeovers. Acquirers who don’t have board approval must own their stock in a target company for at least four years — and then win the support of owners of 80% of the voting shares. That’s too high a threshold even for Schulze, who controls 20.1% of Best Buy’s voting shares. And the conventional wisdom is that the board likely won’t support his offer. At the very least they’d want a higher bid, perhaps more than $30 a share, Jefferies Equity Research analyst Daniel Binder says in a report today. Directors
The company’s stock is up about 19% to around $21 in early trading following the disclosure of the offer from Richard Schulze. In a letter today to board Chairman Hatim Tyabji, Schulze said that his adviser, Credit Suisse, is “highly confident that it can arrange the necessary debt financing” to pay as much as $26 a share for Best Buy — 47% more than its closing price on Friday. “I believe there is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’s customers and building pathways to the next generation of consumers,” the letter says. His proposed acquisition “would allow Best Buy to take the actions that it needs to take outside of the public sphere.” Schulze is by far the largest shareholder, with 20.1% of Best Buy’s shares. He resigned from the board in June, upending a face-saving arrangement reached in May after the Audit Committee said in a report that Schulze helped to cover up former CEO Brian Dunn’s “inappropriate relationship” with a female employee.
Here’s Schulze’s letter:
There has to be a fascinating back story to the Best Buy soap opera. In the latest twist, Best Buy says that company founder Richard Schulze told directors this morning that he would “resign from the board, including the chairmanship, effective immediately.” The head of the board’s Audit Committee, Hatim Tyabji, was named the new chairman. Schultze said in a separate statement that he made his decision “in order to explore all available options for my ownership stake.” He’s by far the largest shareholder, with 20.1% of Best Buy’s shares. The announcement upends a face-saving arrangement reached last month after the Audit Committee said in a report that Schulze helped to cover up former CEO Brian Dunn’s “inappropriate relationship” with a female employee. The multi-billionaire agreed to remain on the board as chairman until the June 21 annual meeting when Tyabji would take the gavel. Schulze then would stay to the end of his term next year with an honorary title of Founder and Chairman Emeritus. It was a humiliating come-down for