Through The Fly's Eyes: Best Buy
from Laurie Pasternack of Theflyonthewall.com
Best Buy Tries to Jump Start Shares
Best Buy (BBY), looking to kick start its sluggish shares, has approved a $5.5 billion stock buyback and raised its dividend 30% to 13 cents a share from 10 cents. Additionally, the top U.S. consumer electronics retailer announced plans to open more stores in North America than previously planned.
This series of moves comes almost a week after Best Buy reported earnings last week that disappointed shareholders and missed analysts' expectations -- by a wide margin.
The company believes the buyback plan, which replaces a previously-announced $1.5 billion stock buyback plan, will benefit FY08 EPS "modestly." Part of the new repurchase program will be used to buy back nearly $3 billion of common stock by the end of February 2008.
Could this plan by the retailer to stay ahead of its competitors Circuit City (CC) and Wal-Mart Stores (WMT) work? Sure, especially if Best Buy is right in saying demand and profit for its offerings - especially high-definition TVs, cell phones and music players -- will increase beginning later this year.