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alstry (< 20)

The Joke about Best Buy



March 30, 2009 – Comments (6)

As you know,  since releasing their earnings last week, practically every analyst and their mother has been blowing hard what a great quarter BestBuy just completed.  Management bragged how they sold down so much inventory and even ran out of inventory in a few catagories.

The whole world  seems to be cheering the outgoing CEO.....Hmmmmmmmmmmmmm.

If BestBuy had such a great quarter, and they did such a good job liquidating inventory......why did BestBuy end the quarter with about $1 Billion LESS cash and more debt and more stores to cover???

From this perspective BestBuy is running  dangerously low on cash as it enters the slowest selling months of the year.  You woulda thunk if they liquidated so much inventory for the holidays, they would be sitting on a pile of cash right now.......

No so........and the economy continues to slow.

Anyone think BestBuy really needs to raise some cash fairly soon to support their expanding operations, heavier debt load, and declining same store sales????????????????

Alstry does.........that is why BestBuy is Alstry's favorite Red Thumb.

As far as homebuilders suggestion is to stay as far away as home prices continue to decline....pretty soon every home that goes vertical will be a negative cash flow proposition for even the financially strongest HBs.

You can be like Donnerrv, or you can prepare........the choice is yours.

6 Comments – Post Your Own

#1) On March 30, 2009 at 4:37 PM, Emilie111 (99.98) wrote:

Agreed, on all counts.

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#2) On March 30, 2009 at 4:42 PM, alstry (< 20) wrote:


From the WSJ:

Defaults on home mortgages insured by the Federal Housing Administration in February increased from a year earlier.

A spokesman for the FHA said 7.5% of FHA loans were "seriously delinquent" at the end of February, up from 6.2% a year earlier. Seriously delinquent includes loans that are 90 days or more overdue, in the foreclosure process or in bankruptcy.

What do you think its going to look like in 6 months after millions have lost their jobs????

You think people are going to be buying flat screen TVs when they can't pay their mortgage or buy food????

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#3) On March 30, 2009 at 4:50 PM, alstry (< 20) wrote:

AND SPREAD AND SPREAD.......More FU for you....

KLA-Tencor to cut 10% of workforce

That is right, company after company is reporting cutting  10% or more of its workforce.....u6 unemployment rates are already approaching should not be too long now before unemployment rates reach 25-35%.....

Here is just small percentage cut.....

Kinetic Concepts to cut 4% of workforce

But to keep things in perspective...this is not KLAs first cut and I am not sure if it is Kinetic Concepts....but if you factor in the recent job reductions at GM alone.....the numbers are staggering........

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#4) On March 30, 2009 at 5:16 PM, nottheSEC (81.34) wrote:

I have to agree you make a compelling argument on BEST BUY on all counts.They perhaps now should be called.. BEST WHY?  Granted the economy is a part of it but seemingly they are the bellweather or barometer.

Fourth-Quarter Performance Summary (U.S. dollars in millions, except per share amounts)       Three Months Ended     Feb. 28, 2009   Mar. 1, 2008 Revenue   $14,724   $13,418 Comparable store sales % change1   (4.9%)   (0.2%) Gross profit as % of revenue   24.6%   23.7% SG&A as % of revenue   17.0%   15.2% Operating income   $980   $1,143 Operating income as % of revenue   6.7%   8.5% Net earnings   $570   $737 Diluted EPS   $1.35   $1.71 Adjusted diluted EPS2   $1.61   $1.71

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#5) On March 30, 2009 at 5:32 PM, alstry (< 20) wrote:

Why do you think BBY's CEO is running out the door as fast as he can as BBY's cash dwindles.......?????

How many times do you think Alstry has seen the CEO shuffle.

Why do you think these guys are dumping employees begging for departures????

And the analysts are pumping this company???  In the end, the only one's that might be pumped are those that listen to the analysts.

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#6) On March 30, 2009 at 6:23 PM, whereaminow (< 20) wrote:

I agree. Good series on this subject, alstry.

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