BBY - Best Buy

[Junto]

Congratulations rkbabang for establishing that you are not BBY's target customer.

 

The business model is shifting. No one can argue any differently. The amount of shift is what will determine the future of BBY. I don't think the shift will be as dramatic as is built into the price and I believe that BBY will shift with it by better equiping their online retailing business (split pricing, delivery cost, etc...). I also think they will be building on their mindShift purchase and Geek Squad services to try and drive revenue growth from IT work for small businesses. Not a needle mover, but should see good margins. It is still very early and they are still a major player in the marketplace.

 

Here is another article that you may want to look at from a buyout standpoint:

http://www.bloomberg.com/news/2012-01-05/best-buy-seen-appreciating-59-as-cash-rich-retailer-invites-lbo-real-m-a.html

 

 

 

 

[bookie71]

Don't forget the "showroom" effect.  How often have you gone to a Best Buy or other store to look at TV's, computers etc., then go home and order online.  I read a survey the other day that said most of the books sold by Amazon had been looked at and paged through somewhere else befor buying (ask Border's and Barnes and Noble if this happens).

[Uccmal]

Congratulations rkbabang for establishing that you are not BBY's target customer.

 

Lol, Definitely not a target customer. 

 

Same store sales down very slightly in q4, interestingly in Canada, and Europe, not the US.  As per earlier in the thread I did some basic web retailing research.  BBY was the 11 th largest online retailer in NA.  The usual suspects were ahead of it: Amzn, staples, appl, dell, wmt, and Sears?  just below is Newegg.  i have looked at WMTs pickings in their retail electronics section.  Its real thin.  I think Appl numbers include apps as well, not sure. 

 

note: part of the reduction in same store sales is due to the plunging price of TVs.  This presumably affects all sellers of TVs, not just BBY. 

 

My bet, not particularly large btw, is that things will turn out better than expected and the stock price will rise.  I only need the stock price up a little to easily double my investment.  I dont need BBY to become the e-tailer of choice, and have no expectation of this. 

 

Such is value investing.  Sometimes things smell a little which is why they are cheap.

[StubbleJumper]

I don't have a stake, but I thought others might find this of interest.

http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/

 

I don't own BBY and I won't shop there. Many of the things mentioned in this article is why.  I had a problem returning something about 3 years ago and I haven't been in a Best Buy since.  I was a few days past their "return window", so even though I had the receipt and never even opened the box "we're sorry there is nothing we can do for you".  Well there is nothing I will ever do for them.  There is simply no reason to ever do business with a company that treats its customers so poorly when you have so many other options.  BBY will not be around 10 years from now and the sales tax issue has nothing to do with it.  I live in NH, so sales taxes have nothing to do with why I use Amazon.com, tigerdirect.com, newegg.com, mwave.com, overstock.com, or even Radioshack, Target, or Wal-Mart, but never ... ever, under any circumstances, Best Buy.  Their prices are not the best, their employees are not knowledgeable, and their customer service has to be among the worst in all of retail.  How can such a business stay as a going concern long term?  I just don't see it.  Not without a good house cleaning of current management and a complete 180 degree turn-around in how they do business.

 

--Eric

 

 

So, let me get this straight.  When you want to buy a TV or sound system, you don't go to BestBuy where they have 97 TVs all lined up so that you can easily compare the picture quality?  Instead you go to RadioShack Walmart where they have like 12 TVs lined up on the wall?  I completely understand the idea of buying electronics online, but there's no way in hell that I'll buy a TV without actually seeing the picture in person, or a sound system without actually hearing it first.  Perhaps I might go to BestBuy to do my comparisons, and then go home and buy it online....but chances are I'll just make a purchase at a big box electronics retailer (like BestBuy) while I'm still at the store.

 

Once in a while, I build up a real hate against a retailer, but...

 

Every TV in my house (5 of them), both large and small, was purchased online.  All of my Denon A/V equipment was purchased online.  All of my computer/networking equipment was purchased online.  All of my video game systems/mp3 players/Roku boxes/Nook e-reader/cell phones/GPS system and other various electronic things I own were all purchased online.  I am very happy with all of it in both price and quality.  I do tons of research before buying anything and I buy only from places where I can easily return it in the rare event that I made a poor decision or the item isn't what I expected.

 

--Eric

 

 

Fascinating.  And, based on some of the other responses in this thread, you are not alone in the approach you take.  In the general population, I wonder how many people make purchase decisions using your approach and how many take my approach.  If most people are like me, then BBY has little to worry about.  But if a significant chunk of the population is like you (ie, somebody who plans in advance, conducts product research online instead of in person, and is price sensitive), then BBY is in some serious trouble.

 

As always, we tend to have a bias towards our own way of thinking, and can err in concluding that others behave in the same "rational" way as ourselves (even if our manner is not demonstratively the most rational!).  This is a real eye-opener for me that some people do actually spend $500 without first seeing or hearing what they are buying.  Again, fascinating.

 

 

SJ

[Guest Hester]

note: part of the reduction in same store sales is due to the plunging price of TVs.  This presumably affects all sellers of TVs, not just BBY. 

 

It affects the retailers with high fixed costs and leverage (I.E. brick and mortar retailers and specialty retailers like BBY) much more than it does online retailers.

[Guest Hester]

I don't have a stake, but I thought others might find this of interest.

http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/

 

I don't own BBY and I won't shop there. Many of the things mentioned in this article is why.  I had a problem returning something about 3 years ago and I haven't been in a Best Buy since.  I was a few days past their "return window", so even though I had the receipt and never even opened the box "we're sorry there is nothing we can do for you".  Well there is nothing I will ever do for them.  There is simply no reason to ever do business with a company that treats its customers so poorly when you have so many other options.  BBY will not be around 10 years from now and the sales tax issue has nothing to do with it.  I live in NH, so sales taxes have nothing to do with why I use Amazon.com, tigerdirect.com, newegg.com, mwave.com, overstock.com, or even Radioshack, Target, or Wal-Mart, but never ... ever, under any circumstances, Best Buy.  Their prices are not the best, their employees are not knowledgeable, and their customer service has to be among the worst in all of retail.  How can such a business stay as a going concern long term?  I just don't see it.  Not without a good house cleaning of current management and a complete 180 degree turn-around in how they do business.

 

--Eric

 

 

So, let me get this straight.  When you want to buy a TV or sound system, you don't go to BestBuy where they have 97 TVs all lined up so that you can easily compare the picture quality?  Instead you go to RadioShack Walmart where they have like 12 TVs lined up on the wall?  I completely understand the idea of buying electronics online, but there's no way in hell that I'll buy a TV without actually seeing the picture in person, or a sound system without actually hearing it first.  Perhaps I might go to BestBuy to do my comparisons, and then go home and buy it online....but chances are I'll just make a purchase at a big box electronics retailer (like BestBuy) while I'm still at the store.

 

Once in a while, I build up a real hate against a retailer, but...

 

Every TV in my house (5 of them), both large and small, was purchased online.  All of my Denon A/V equipment was purchased online.  All of my computer/networking equipment was purchased online.  All of my video game systems/mp3 players/Roku boxes/Nook e-reader/cell phones/GPS system and other various electronic things I own were all purchased online.  I am very happy with all of it in both price and quality.  I do tons of research before buying anything and I buy only from places where I can easily return it in the rare event that I made a poor decision or the item isn't what I expected.

 

--Eric

 

 

Fascinating.  And, based on some of the other responses in this thread, you are not alone in the approach you take.  In the general population, I wonder how many people make purchase decisions using your approach and how many take my approach.  If most people are like me, then BBY has little to worry about.  But if a significant chunk of the population is like you (ie, somebody who plans in advance, conducts product research online instead of in person, and is price sensitive), then BBY is in some serious trouble.

 

As always, we tend to have a bias towards our own way of thinking, and can err in concluding that others behave in the same "rational" way as ourselves (even if our manner is not demonstratively the most rational!).  This is a real eye-opener for me that some people do actually spend $500 without first seeing or hearing what they are buying.  Again, fascinating.

 

 

SJ

 

Being able to actually see and touch a line of T.V's in a store... is it better than being online, with more product selection, the ability to see far more specs for each product, seeing dozens of independant reviews for each model, the ability to see the sellers history and popularity, with generally cheaper prices, in the comfort of your own home, without an overzealous salesman breathing down your neck?

 

Fortunately every quarter there is a comprehensive survey that comes out, asking people whether they prefer to buy online or at a store. AMZN's and BBY's financial statements.

[CassiusKing1]

I don't have a stake, but I thought others might find this of interest.

http://www.forbes.com/sites/larrydownes/2012/01/02/why-best-buy-is-going-out-of-business-gradually/

 

I don't own BBY and I won't shop there. Many of the things mentioned in this article is why.  I had a problem returning something about 3 years ago and I haven't been in a Best Buy since.  I was a few days past their "return window", so even though I had the receipt and never even opened the box "we're sorry there is nothing we can do for you".  Well there is nothing I will ever do for them.  There is simply no reason to ever do business with a company that treats its customers so poorly when you have so many other options.  BBY will not be around 10 years from now and the sales tax issue has nothing to do with it.  I live in NH, so sales taxes have nothing to do with why I use Amazon.com, tigerdirect.com, newegg.com, mwave.com, overstock.com, or even Radioshack, Target, or Wal-Mart, but never ... ever, under any circumstances, Best Buy.  Their prices are not the best, their employees are not knowledgeable, and their customer service has to be among the worst in all of retail.  How can such a business stay as a going concern long term?  I just don't see it.  Not without a good house cleaning of current management and a complete 180 degree turn-around in how they do business.

 

--Eric

 

 

So, let me get this straight.  When you want to buy a TV or sound system, you don't go to BestBuy where they have 97 TVs all lined up so that you can easily compare the picture quality?  Instead you go to RadioShack Walmart where they have like 12 TVs lined up on the wall?  I completely understand the idea of buying electronics online, but there's no way in hell that I'll buy a TV without actually seeing the picture in person, or a sound system without actually hearing it first.  Perhaps I might go to BestBuy to do my comparisons, and then go home and buy it online....but chances are I'll just make a purchase at a big box electronics retailer (like BestBuy) while I'm still at the store.

 

Once in a while, I build up a real hate against a retailer, but...

I think this gets at what is hurting BBY as well.  Say I research TV's online and then narrow it down to the few I want.  Not gonna buy them without seeing them in person, so I trek over to my local BBY to check them and the picture out in person.  Verify and decide on the model I want, then go home and get back online to get the cheapest price and save taxes.  BBY is being used as a walk in catalogue for all online competitors.

[rmitz]

I think this gets at what is hurting BBY as well.  Say I research TV's online and then narrow it down to the few I want.  Not gonna buy them without seeing them in person, so I trek over to my local BBY to check them and the picture out in person.  Verify and decide on the model I want, then go home and get back online to get the cheapest price and save taxes.  BBY is being used as a walk in catalogue for all online competitors.

 

I don't bother seeing them in BBY either.  The picture is way too subjective to really be able to tell how it's going to look in your home vs a store.  There are high end home theater shops that have demo rooms that can *actually* give you a good idea, but that's not what Best Buy is. 

 

The real problem with best buy is that they make their money by taking advantage of the less-educated consumer, by pushing products on them they don't really need (sometimes just by having the expensive stuff on the shelf!)  Once people feel like they've been cheated, they will never be back (at least not with cash in hand).

[StubbleJumper]

I think this gets at what is hurting BBY as well.  Say I research TV's online and then narrow it down to the few I want.  Not gonna buy them without seeing them in person, so I trek over to my local BBY to check them and the picture out in person.  Verify and decide on the model I want, then go home and get back online to get the cheapest price and save taxes.  BBY is being used as a walk in catalogue for all online competitors.

 

I don't bother seeing them in BBY either.  The picture is way too subjective to really be able to tell how it's going to look in your home vs a store.  There are high end home theater shops that have demo rooms that can *actually* give you a good idea, but that's not what Best Buy is. 

 

The real problem with best buy is that they make their money by taking advantage of the less-educated consumer, by pushing products on them they don't really need (sometimes just by having the expensive stuff on the shelf!)  Once people feel like they've been cheated, they will never be back (at least not with cash in hand).

 

 

I always thought that they made their money by pushing overpriced extended warranties and encouraging consumers to buy "superior quality" Monster HDMI cables.....  ???  I've mostly found their prices for the actual electronics to be pretty much in line with the market, but the unplanned purchases of warranties and cables seem to be less competitively priced.

[Arden]

Going back to the first message- saying best buy has no debt is simply misleading,

BBY is leasing almost or all its stores. There basically no difference between taking debt and buying a store

and leasing it. As a matter of fact, there is a good chance accounting rules will change in the next few years requiring companies to discount the lease and write it as a liability:

http://en.wikipedia.org/wiki/Accounting_for_leases_in_the_United_States#Present_vs._New_Lease_Accounting_Standards

 

And, beyond the technicality of the accounting rules, this makes sense- as Prof. Damodaran explains so well:

http://pages.stern.nyu.edu/~adamodar/pdfiles/papers/newlease.pdf

 

As BBY writes in its report, when they use a multiple of 8 times rent they get to an equivilant of 8.5 billion in debt. I think multiplying by 8 is too low but one thing is for sure, saying BBY has no debt is wrong. Heck, not only does it have an equivilant of debt, its rent rises with inflation and whims of landlords.

 

Ardan

[racemize]

Going back to the first message- saying best buy has no debt is simply misleading,

BBY is leasing almost or all its stores. There basically no difference between taking debt and buying a store

and leasing it. As a matter of fact, there is a good chance accounting rules will change in the next few years requiring companies to discount the lease and write it as a liability:

http://en.wikipedia.org/wiki/Accounting_for_leases_in_the_United_States#Present_vs._New_Lease_Accounting_Standards

 

And, beyond the technicality of the accounting rules, this makes sense- as Prof. Damodaran explains so well:

http://pages.stern.nyu.edu/~adamodar/pdfiles/papers/newlease.pdf

 

As BBY writes in its report, when they use a multiple of 8 times rent they get to an equivilant of 8.5 billion in debt. I think multiplying by 8 is too low but one thing is for sure, saying BBY has no debt is wrong. Heck, not only does it have an equivilant of debt, its rent rises with inflation and whims of landlords.

 

Ardan

 

This makes since, but why would you use a multiple on rent?  Why wouldn't it just be what it is?  Is this for assuming the next 8 years?

[Uccmal]

The real problem with best buy is that they make their money by taking advantage of the less-educated consumer, by pushing products on them they don't really need (sometimes just by having the expensive stuff on the shelf!)  Once people feel like they've been cheated, they will never be back (at least not with cash in hand).

 

Yes well.  I have never felt cheated at BBY.  That article earlier from Forbes just confirms why I detest that crappy rag and its inferior bad writing.

 

The education, thirst for research, and ability of people on this board is far above the average consumer.  Many people of all ages dont use computers daily for anything other than facebook, email,or gaming.  How to explain GM, or Chrysler, or Fiat.  Decades of producing shit that rots in a year and people still insist on buying their cars.  GM is the worlds largest producer of shit bar none and still sells the most cars.  Its about optics and ease of use, and speed of delivery.  BBY still beats internet on all these.

 

Amazon has yet to break out how much of other is being pillaged from BBY.

[Guest Hester]

Does anyone know if BBY breaks out what % of SG&A payroll expenses are, anywhere??

[Guest Hester]

The real problem with best buy is that they make their money by taking advantage of the less-educated consumer, by pushing products on them they don't really need (sometimes just by having the expensive stuff on the shelf!)  Once people feel like they've been cheated, they will never be back (at least not with cash in hand).

 

Yes well.  I have never felt cheated at BBY.  That article earlier from Forbes just confirms why I detest that crappy rag and its inferior bad writing.

 

The education, thirst for research, and ability of people on this board is far above the average consumer.  Many people of all ages dont use computers daily for anything other than facebook, email,or gaming.  How to explain GM, or Chrysler, or Fiat.  Decades of producing shit that rots in a year and people still insist on buying their cars.  GM is the worlds largest producer of shit bar none and still sells the most cars.  Its about optics and ease of use, and speed of delivery.  BBY still beats internet on all these.

 

Amazon has yet to break out how much of other is being pillaged from BBY.

 

I completely agree. Just like Best Buy, GM and Chrysler have been selling overpriced, shit products for years and business has been consistently great, without a single bump along the road. Just look at their fantastic shareholder returns over the last decade. They haven't even went bankrupt in months! MONTHS!

 

I mean, the last time GM went bankrupt that guy Barack Obama was in office. Hey, does anybody remember those Iphones everybody had back then? And Lady Gaga was so popular in that era, whatever happened to her? I love reminiscing.

 

[Uccmal]

Hester, Your sense of sarcasm is intact, but you missed the point.  Last I looked Bby sells the same products as all of their competition.  GM and Chrsysler went bankrupt due to impossibly high fixed costs, decades of mismanagement, and pink socialist unions, not due to selling no vehicles.  When GM filed they were the worlds largest purveyor of crappy vehicles. 

 

We are debating different things.  I am coming at it from an investment standpoint and you are coming at it from a product/service standpoint.  Walmart proves that store retailing Of garbage is still a viable business model.  BBY sells mid range merchandise that is indentical to AMZN, or Newegg.  BBY also sells online. 

 

Value investing is not pretty but it has worked for me for years now.  Often enough I am right to make it very lucrative.

[Arden]

Going back to the first message- saying best buy has no debt is simply misleading,

BBY is leasing almost or all its stores. There basically no difference between taking debt and buying a store

and leasing it. As a matter of fact, there is a good chance accounting rules will change in the next few years requiring companies to discount the lease and write it as a liability:

http://en.wikipedia.org/wiki/Accounting_for_leases_in_the_United_States#Present_vs._New_Lease_Accounting_Standards

 

And, beyond the technicality of the accounting rules, this makes sense- as Prof. Damodaran explains so well:

http://pages.stern.nyu.edu/~adamodar/pdfiles/papers/newlease.pdf

 

As BBY writes in its report, when they use a multiple of 8 times rent they get to an equivilant of 8.5 billion in debt. I think multiplying by 8 is too low but one thing is for sure, saying BBY has no debt is wrong. Heck, not only does it have an equivilant of debt, its rent rises with inflation and whims of landlords.

 

Ardan

 

This makes since, but why would you use a multiple on rent?  Why wouldn't it just be what it is?  Is this for assuming the next 8 years?

 

I wrote 8 multiple on rent because this is what they choose to do in their 10K when accounting for off balance sheet obligations.

 

I think it's some kind of rule of thumb, when what they should be doing in discounting their future rent payments. because it's reasonable to assume that the rent will rise with inflation, then the discount rate should be quite low in my opinion. As I said, there is no difference between taking a loan and buying and leasing, so the off balance sheet obligation should be similar to the price of the spaces they lease. So, how much do you expect a leased space that yields 1 billion should cost?

I reckon the answer should be greater than 10 Billion, or even  15 Billion -which still gives us a reasonable cap rate of 6.6%.

 

 

[Junto]

Best Buy's CEO blog posting for those that are interested and have not seen: http://www.bbycommunications.com/briandunn/

 

 

[rmitz]

Yes well.  I have never felt cheated at BBY.  That article earlier from Forbes just confirms why I detest that crappy rag and its inferior bad writing.

 

The education, thirst for research, and ability of people on this board is far above the average consumer.  Many people of all ages dont use computers daily for anything other than facebook, email,or gaming.  How to explain GM, or Chrysler, or Fiat.  Decades of producing shit that rots in a year and people still insist on buying their cars.  GM is the worlds largest producer of shit bar none and still sells the most cars.  Its about optics and ease of use, and speed of delivery.  BBY still beats internet on all these.

 

Amazon has yet to break out how much of other is being pillaged from BBY.

 

While the Forbes article may have been excessive, it certainly rhymes with my own experience (and plenty of people I know). 

 

You bring up GM there--the funny thing is that GM no longer produces crap, but people still believe it does.  It may take the average consumer a long time to learn something, but once learned, it becomes very difficult to break out...and this cuts both positively and negatively.

[ERICOPOLY]

Yes well.  I have never felt cheated at BBY.  That article earlier from Forbes just confirms why I detest that crappy rag and its inferior bad writing.

 

The education, thirst for research, and ability of people on this board is far above the average consumer.  Many people of all ages dont use computers daily for anything other than facebook, email,or gaming.  How to explain GM, or Chrysler, or Fiat.  Decades of producing shit that rots in a year and people still insist on buying their cars.  GM is the worlds largest producer of shit bar none and still sells the most cars.  Its about optics and ease of use, and speed of delivery.  BBY still beats internet on all these.

 

Amazon has yet to break out how much of other is being pillaged from BBY.

 

While the Forbes article may have been excessive, it certainly rhymes with my own experience (and plenty of people I know). 

 

You bring up GM there--the funny thing is that GM no longer produces crap, but people still believe it does.  It may take the average consumer a long time to learn something, but once learned, it becomes very difficult to break out...and this cuts both positively and negatively.

 

We bought a 2008 GM Suburban.  The interior and ride is far more comfortable than that of my wife's BMW.  It's a fantastic car.

 

[ExpectedValue]

They are cigar butts. If they were great businesses you'd be paying high multiples for them. There is a place for that. There is also Still a place for dumpster diving for cigar butts.

 

how do you know they're not value traps?

[Guest Hester]

WTF am I dreaming this?

 

So Peter Burke CEO if I understand you correctly, 1. Valuation for RIMM doesn't matter, none is too low because the business is doomed 2. BBY's business doesn't matter and shouldn't be discussed, becuase the valuation is mildly cheap.

 

Hasn't nearly every stock ever discussed on this message board been selling at a low p/e or p/b? Can't they all be considered a cigar butt? So no need to ever have any discussions about stocks!

[Arden]

You do realize there is no conclusion to be reached here, right? It's just becoming an... internet fight!

http://i2.kym-cdn.com/photos/images/newsfeed/000/220/149/Hey-Guys-Itis-an-Internet-Fight.jpg

Just seeing a 100 page long argument about a company tells you something is weird.

 

On the other hand, you should  focus on the data you do have.

I'm curious- anyone here that knows the reports, what is the FCF of BBY in your opinion?

because, looking at the report, I'm reaching something like 500 million FCF(1190 operating activities minus changes in working capital minus capex) in FY 2010, for a company I see as having about 12 Billion in off balance sheet liabilities, so, even if it is a cigar butt, isn't it a bit expensive with a multiple of 17?

[ShahKhezri]

The real problem with best buy is that they make their money by taking advantage of the less-educated consumer, by pushing products on them they don't really need (sometimes just by having the expensive stuff on the shelf!)  Once people feel like they've been cheated, they will never be back (at least not with cash in hand).

 

Yes well.  I have never felt cheated at BBY.  That article earlier from Forbes just confirms why I detest that crappy rag and its inferior bad writing.

 

The education, thirst for research, and ability of people on this board is far above the average consumer.  Many people of all ages dont use computers daily for anything other than facebook, email,or gaming.  How to explain GM, or Chrysler, or Fiat.  Decades of producing shit that rots in a year and people still insist on buying their cars.  GM is the worlds largest producer of shit bar none and still sells the most cars.  Its about optics and ease of use, and speed of delivery.  BBY still beats internet on all these.

 

Amazon has yet to break out how much of other is being pillaged from BBY.

 

I completely agree. Just like Best Buy, GM and Chrysler have been selling overpriced, shit products for years and business has been consistently great, without a single bump along the road. Just look at their fantastic shareholder returns over the last decade. They haven't even went bankrupt in months! MONTHS!

 

I mean, the last time GM went bankrupt that guy Barack Obama was in office. Hey, does anybody remember those Iphones everybody had back then? And Lady Gaga was so popular in that era, whatever happened to her? I love reminiscing.

 

it's a cigar butt. i guess we stopped investing in cigar butts around here and have resorted to buying vrsk at 22 times last year's earnings. you can do very well as an investor buying into run of the mill or even bad businesses. it all depends on price. I don't get all these debates about sears kmart and best buy being bad stores. Everybody knows that. That's not even debatable yet every thread about the companies devolves into that discussion. They are cigar butts. If they were great businesses you'd be paying high multiples for them. There is a place for that. There is also Still a place for dumpster diving for cigar butts.

 

Not to high-jack the thread, but I'm invested  in VRSK, makes up about 4% of my portfolio as a result of the high multiple.  They have absolutely no competition, unlike BBY/RIMM and some of the other cheap (based on metrics) stocks discussed here.  Good businesses with enviable operating margins and durable competitive advantages with a moat deserve to trade a high multiple.  VRSK should have never been public, just like Visa, the same story on why they are public.  Having worked in the insurance industry, VRSK's ISO is the equivalent of water to a fish. 

 

BBY on the other hand is not even a cigar butt (IMO), the poster talking about 8x lease is correct.  It's a highly leveraged business, if you model a 10% drop in revenues then what happens to the share repurchases, gone and there is no floor provided by the company.  How much of their square footage was devoted to DVD's, video games, computer peripherals? and what do you with that space?  They are trying to move a big ship. 

 

Every IPAD sold at BBY results in lower future sales for BBY. 

[shalab]

We bought a 2008 GM Suburban.  The interior and ride is far more comfortable than that of my wife's BMW.

 

If there is one brand to be analyzed, it is BMW. Their vehicles are expensive and cost to maintain but do have some higher end features. I would buy a GM vehicle any day - it is cheaper and better, IMO.

 

 

[Uccmal]

You do realize there is no conclusion to be reached here, right? It's just becoming an... internet fight!

http://i2.kym-cdn.com/photos/images/newsfeed/000/220/149/Hey-Guys-Itis-an-Internet-Fight.jpg

Just seeing a 100 page long argument about a company tells you something is weird.

 

On the other hand, you should  focus on the data you do have.

I'm curious- anyone here that knows the reports, what is the FCF of BBY in your opinion?

because, looking at the report, I'm reaching something like 500 million FCF(1190 operating activities minus changes in working capital minus capex) in FY 2010, for a company I see as having about 12 Billion in off balance sheet liabilities, so, even if it is a cigar butt, isn't it a bit expensive with a multiple of 17?

 

 

LOL, and your wrong as well.....