Best Buy: A Big Deal to Watch in 2013

Best Buy isn't just a proxy for the animal spirits of the private equity industry. The retailer is also exposed to the biggest trends in the tech and retail sectors, such as a consumer shift from PC's to mobile devices.

The prospect that Schulze, who is an over 20% holder of Best Buy's shares, decides to walk away from his takeover proposal might highlight the retailers struggles amid online competition from Amazon (AMZN) and discount retailer Wal-Mart (WMT). It could also highlight a second order impact of weaker than expected demand for Microsoft's (MSFT) Windows 8 operating system, which is expected to breathe new life into the PC market amid sales declines and surging demand for mobile smartphone and tablet devices.

Since late November, retail consumer market research specialist NPD Group has reported underwhelming demand for Windows 8 and the mobile and desktop hardware that goes with Microsoft's newest software launch.

On Dec. 24, the New York Times cited NPD data as showing a drop in year-over-year demand for Microsoft software, signaling weakness across the PC-industry. Meanwhile, MasterCard Advisors SpendingPulse data shows a modest 0.7% rise in retail sales from Oct. 28 through Dec. 24, which reflects slowing growth from 2011 levels figures.

For Best Buy, the impact may be seen in fourth quarter earnings. On Dec. 21, Morgan Stanley analyst David Gober cut the company's estimated gross margins and earnings per share citing weak consumer electronics retail demand and higher sales of Apple (AAPL) and Google (GOOG)-Android powered devices that are sold with promotional discounts.

As Schulze's Best Buy buyout drama nears a final act, investors should watch for a prospective deal as a key leading indicator of private equity industry deals, in addition to the fast-changing retail and technology sectors.

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-- Written by Antoine Gara in New York

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