In-Depth Analysis: Best Buy (BBY, AMZN, WMT, BKS, BGP)
Best Buy (NYSE: BBY[FREE Stock Trend Analysis]) reported fourth quarter and full year earnings yesterday and failed to meet analysts' expectations. Best Buy reported revenue of $16.26 billion in the fourth quarter compared to $16.55 billion in the same period a year ago, or a decrease of 1.8%. Net income decreased by 16.4% from $779 million to $651 million. Thus, earnings per share fell from $1.82 to $1.62.This decrease largely reflects Best Buy's decision to spend $222 million in restructuring charges to focus its international efforts and drive supply chain efficiencies. Excluding restructuring charges, earnings per share rose for the quarter to $1.98 which beat analyst estimates. Nonetheless, Best Buy's stock price showed that investors were less than thrilled with the earnings news. Best Buy's share price fell 5.4% on the release of the earnings information. Best Buy struggled domestically: revenue fell 4% versus the prior-year period. Most notably, there was double-digit decline in sales of entertainment hardware and software and TVs. Consumer demand for new television technologies was not a significant revenue-generator. Where the domestic segment declined, it was offset by the 4% increase in the international segment. This increase is mostly due to new store openings and a favorable fluctuation in currency exchange rates during this time. As Benzinga readers already know, Best Buy has missed quarterly estimates badly in the last year, and is considering the possibility that it may have to lower prices to remain competitive with Amazon (NASDAQ: AMZN) and Wal-Mart (NYSE: WMT). The question remains, how likely is it that Best Buy can remain profitable competing with these two companies. Best Buy has a similar problem that the bookseller industry is currently experiencing. Barnes and Noble (NYSE: BKS) struggles (as did Borders (NYSE: BGP before it fell into bankruptcy) with...
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