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10:56 pm
January 6, 2012
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Carlh868
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http://www.forbes.com/sites/la…..gradually/
I just read this article about Best Buy. Althouth I never encounted the bad service from my local Best Buy as described by the writer, it does seems that Best Buy is loosing the battle and the wound is self inflicted. 
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12:52 pm
February 5, 2011
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Cam
| | North Albany, Oregon | |
| Member | posts 10 |
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Jae and sunnymui,
I appreciate your insights and agree with most of what you both said. There also seems to be (to me anyways) an advantage to selling larger electronics from a 'brick-and-mortar' site where the consumer is one transporting the device to their own residence. Much like not wanting to wait for a product to arrive, being able to transport the goods themselves seems to be favorable to (some) consumers. (I do realize that products have to be shipped to the stores.) Along those same lines, does paying for shipping costs affect the consumer's willingness to make online purchases? I am not implying that online prices are more due to these costs, rather, this does seem to have a presence in the mind of the consumer.
With the online retailers being what they are, isn't Best Buy's underlying financial data still the same whether the competition is public or privately owned? It would seem that they would still generate the same amount of cash. On to more of a quantitative topic, it appears that Best Buy's financials are pretty good, and at current prices, it appears to offer some value. Any thoughts on the financials? I am young and dumb and trying to see if what I think is a value has validity among you gurus. Thanks for any information/insight.
-Cam
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3:20 am
February 5, 2011
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sunnymui
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At the same time, I don't think newegg makes best buy completely obsolete. I feel best buy is good for the casual consumer of electronics, people who need help in making a decision or getting what they need. But for people who already know what they want, newegg has fantastic prices and great service. Still, some people hate waiting for something to come in the mail and want their purchase in their hand now. There you have best buy. Also, the kind of people who shop at newegg, in my opinion, do a lot of research (i'm generalizing; this is also disputable) about what they should buy and then know what they want. I can imagine less involved consumers going to best buy to glance around all their options, inspect in real life, solicit sale people's opinions, then drive home with their purchase.
To me best buy would be the industry leader for brick-and-mortar electronics.
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10:39 am
February 4, 2011
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Jae Jun
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Industry leader has brand recognition, at least a couple of moats such as cost advantage, switching costs, network effect or other combinations. And better margins than the competition.
I'm not so sure about these retail companies now. Always being threatened by new distribution channels such as new internet shopping sites.
If NewEgg.com did an IPO, their market cap would be huge going forward. Then people will realize bestbuy has more competition than they think because these wall Street folks have never shopped at newegg.com
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8:17 am
February 3, 2011
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Cam
| | North Albany, Oregon | |
| Member | posts 10 |
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Depending on your definition of "industry leader," you could possibly call Best Buy an industry leader. They are the "leading U.S. retailer of consumer electronics." Granted, they do have a few very capable competitors and the nature of consumer electronics will always require them to competitively price their products.
This brings up a good question. What do you guys think is a good definition of an industry leader?
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8:13 pm
February 2, 2011
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Discountvalue
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I think using a 15% discount rate would be more prudent. 9% is best left for industry leaders.
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5:53 pm
February 2, 2011
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Cam
| | North Albany, Oregon | |
| Member | posts 10 |
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Best Buy is currently looking pretty nice using the DCF method. Using owner earnings and a conservative growth rate of 8% with a discount of 9%, it is currently priced at about a 48% MOS. I haven't had time to verify any numbers. Anybody else looking into BBY? I know their last quarter's earnings were not what was expected of them and the price took a hit close to 15%.
On the surface it looks like a nice opportunity.
Any opinions?
-Cam
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