Just a few years ago, they were practically printing money at the Richfield headquarters of Best Buy.
Despite lower sales, MPR's Marty Moylan reports, Best Buy is poised to become even more dominant in the electronics field. Still, 4,000 employees at the company headquarters in Minnesota are being offered deals to become unemployed.
The Wall Street analysts generally love misery of working people, fairly gushing this morning that the company is "right-sizing." And the stock opened higher after the firm reported its earnings, prompting a wave of "half empty" vs "half full" news coverage.
"Best Buy tops profit forecasts" said CNN Money. "Best Buy 3Q Net Plunges 77%, To Slash New-Store Openings," the same Web site reported 10 minutes later. The bottom line? Best Buy made a profit; just not a big profit -- only $52 million.
So it was surprising to hear CNBC tease an interview with an analyst this morning by asking, "Can Best Buy survive?" A company makes $52 million in three months and it's on death's doorstep? It is, indeed, a "new" economy.
That analyst, Stacey Widlitz of Pali Research, said the good news is "it wasn't a total disaster." She also described the cuts in employees as "good news." Best Buy's problem, she said, is electronics are 10-percent cheaper at WalMart, a company analysts seemed to be burying a year ago.
The CNBC hosts tried mightily to do the same to Best Buy this morning, but Widlitz wasn't biting. "No, I'm not worried about their viability," she said. "With cost cutting in the organization... they have plenty of time before there's a real issue here."
The soon-to-be unemployed may not be able to say the same.
Tying this into the earlier post- where were the regulators, yet another reason you cannot trust the greediest people our society creates to produce good results for everyone. In addition to the fraud they tend to engage in, corporate entities and some markets (like financial markets) are fundamentally sociopathic institutions by nature. Profit is their only responsibility, their only goal, their only objective, regardless of whatever harm it may cause. Frequently what is bad for people, animals, society, government, and the environment is good for investors. We can have an economy with investors and corporations, but we can't trust either of them. You don't trust a sociopath and expect it to end well.
Bob I hope Marty Moylan follows up on this once the deadline has passed to see how many people do take the package and if layoffs happen after that. One neat trick a lot of companies pull is to announce cut backs at the time of bad news, but as time passes they do not necessarily happen.
The market responds to such announcements because it is so short term based. That is why companies plan them the day before they announce some bad earnings or other bad news.
The news media seldom follows up on the results because they are on to a new story. Best Buy did not have to actually say how many people would be leaving or give people their walking papers, all they had to do is say they were going to and then the stock went up.
Take a look at the insider trades...I've heard that insiders have been buying ( really buying with cash, not just exercising any old options)...their own stock.
Just to be on the safe side, I think our government should bail Best Buy out immediately.
I'ts funny how a little time changes things. I used to work for Best Buy and the Internet and recession have really damaged them... here's my blog about a former employees take on their survival: http://prosumerist.wordpress.com/2011/10/12/will-best-buy-survive/