This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Best Buy-Out Looms! No Exchanges, No Refunds!

I don't think anyone can feel good about the company's prospects, even those with the most optimistic outlook.

Speaking of which, Best Buy's management opted to not provide an outlook for the rest of the year. You can draw your own conclusions from that. But what it tells me is that management does not have a pulse of the company nor the confidence to project how it plans to execute. So it would seem that Schulze's offer just might be more appealing at this point than previously thought.

I'm also inclined to think it is possible the company's unwillingness to issue guidance could be a strategy aimed at not disrupting its valuation too much in the event that it again underperforms in the next quarter. I don't think another miss would come as a surprise to anyone at this point. The only surprise here is the company is making this decision harder than it needs to be. Clearly, it is not going to beat Wal-Mart at its own game. Competing with Amazon? Forget about it.

Can Joly manage the company well enough that it does not reach a point where "saving it" is no longer an option? Will Schulze sit idly while watching his personal wealth erode? I think there are a lot of similarities here with what happened recently at Yahoo! (YHOO) when Marissa Mayer took over at the urging of a disgruntled shareholder Daniel Loeb.

Best Buy's life is at stake, and it should seriously consider taking the offer that is now on the table from Schulze and apply a strict policy of no exchanges and no refunds.

The stock is down 50% from where it was a year and a half ago at $36. Now trading just under $18, investors should begin to wonder, what is to stop it from going into single digits by this time next year? I think this is what Schulze (as noted, its biggest shareholder) understands.

If $26 per share is considered, Schulze would be offering a 44% premium for Best Buy above its current valuation. Hmmm. Let's see, on one hand you have 44% above market value and on the other hand you are looking dead in the face at Wal-Mart and Amazon -- and for good measure, let's throw in hhgregg (HGG).

Best Buy shareholders should take this deal and not look back.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG
BBY $35.18 0.00%
AAPL $128.95 0.00%
FB $78.99 0.00%
GOOG $537.90 0.00%
TSLA $226.03 0.00%

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs