Best Buy (NYSE:BBY) continues to lurch forward and attempt to revitalize itself. New C level officers are in place. They have decided to ramp up on-line activities. (Hey that sounds fresh) They have dwindling cash resources which is disturbing.
Do we smell a take-over. Because we do smell something.
Best Buy leading retail problem is consumers doing physical browsing and then placing on-line orders somewhere else. OK so they have a tremendous strength that they cannot leverage. In the mean time Google, Apple, Samsung and Microsoft (think games and maybe phones) all have a vested interest in selling hardware and devices. Best Buy still generates huge foot traffic and satisfies any tactile pre-purchase needs.
As a mass market retailer Best Buy has its faults which are well documented in the market place. But to someone wishing to dominate distribution channels Best Buy offers some near monopolistic advantages.
So like someone should buy them, feature their own products and kick competitors in the groin area.
Market cap of around $5 Billion and dropping. An expensive dividend yield of 4.45% and an approximately short interest position of around 10% of public float, the under 5 trailing PE ratio has got to make an acquisition look good.
Maybe go the private equity route and disguise any anti-trust issues through the chop-house process but the bits and pieces will give strategic advantage to key players. Given the huge cash balances of some tech players this is entirely doable.
Remember its a double play gambit. Enhance your own product line and torpedo some or all your competitors.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti
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