Best Buy, good and bad

  • Updated: August 20, 2012 - 8:26 PM

 

STRENGTHS

Best Buy is a Fortune 100 company with more than $50 billion in annual revenue.

• It generated more than $1.8 billion in operating profit last year.

• The company has $1.2 billion in cash and near-cash securities.

• It has 1,447 stores across the United States and 2,861 stores throughout Europe, Canada, China and Mexico and 167,000 employees.

• Its Geek Squad unit gives it additional service offerings for customers beyond hardware.

• It's outlasted a gaggle of consumer electronics competitors, including Circuit City and Highland Superstores.

WEAKNESSES

• Best Buy is cursed by the "showrooming" effect as customers browse Best Buy stores but then purchase online through competitors such as Amazon.

• Revenue growth has slowed in recent years and expectations are the company will see annual revenue declines in next two years.

• Several high-profile executives have departed in the last year, including Geek Squad founder Robert Stephens.

• Management turmoil has left investors confused about the company's strategy and business model. The stock is trading near its five-year lows. Shares dropped 10 percent Monday to $18.16.

• Credit rating agencies this month downgraded Best Buy's debt rating to non-investment grade status.

PATRICK KENNEDY
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