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Best Buy Co. Inc. (BBY)

Best Buy Co. Inc. (BBY). $47.46. Wednesday, April 11, 2007. Best Buy Co. Inc. Index Membership NYSE S&P 500 S&P Composite 1500 Index Sector Services Industry Electronic Stores. Best Buy Co. Inc.

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Best Buy Co. Inc. (BBY)

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  1. Best Buy Co. Inc.(BBY) $47.46 Wednesday, April 11, 2007

  2. Best Buy Co. Inc. • Index Membership • NYSE • S&P 500 • S&P Composite 1500 Index • Sector • Services • Industry • Electronic Stores

  3. Best Buy Co. Inc. • Best Buy Co., Inc. is an innovative Fortune 100 growth company and North America No. 1 consumer electronics retailer and entertainment software which operates more than 1,100 stores in the U.S., Canada, and China. • Based in Minneapolis, Minnesota • Founded in 1966 • 128,000 Employees • 2,000 Stockholders

  4. Best Buy Operations • Operate retail stores and commercial websites under the brand names: • Best Buy Stores • Consumer Electronics • Future Shop • Canadian Based Electronic Retail Store • Magnolia Audio Video • High-end audio and video products and services • Geek Squad • 24-Hour Computer support

  5. Overall Store Development • Best Buy (US): 771 • Best Buy (Canada): 44 • Future Shop (Canada): 119 • Magnolia Audio Stores: 20 • Pacific Sales Showroom: 14 • Five Star Stores (China): 131

  6. Best Buy Product Groups • Consumer Electronic • Largest Product Group for 2006 • Video Products, Audio Products, and Services • Home Office • Notebook , Desktop, and Services • Entertainment Software • DVDs, Video Games, Software, and CDs • Appliances • Refrigerators, microwaves, washers & dryers

  7. Product Groups’ Performance

  8. Acquisitions • 2001 • Magnolia Audio and Video • Future Shop Ltd. • Musicland Stores Corp. • 2002 • Geek Squad • 2003 • Echo Networks Inc.

  9. Acquisitions (cont.) • 2006 • Assets of AV Audiovisions, Inc. • Howell & Associates • Jiangsu Five Star Appliance Co. • Pacific Sales Kitchen and Bath Centers, Inc. • 2007 • Speakeasy Inc.

  10. Acquisitions

  11. Online Retail • Amazon • Regional Discount Store • Wholesale Clubs • Sam’s Club, Costco • Video Rental Stores • Blockbuster, Netflix • Specialty Retail Store • Circuit City, Comp USA, Lowe’s Competitors

  12. Best Buy Vs. Circuit City

  13. Financial Statistics • Current Ratio: 1.44 • Capable of paying off obligations • Quick Ratio: 0.80 • Suggests that Best Buy holds a lot of inventory; retail store • Inventory Turnover: 7.89 • Days in inventory: 46.26 days • Total Debt/Equity: 0.105 • Beta: 1.8

  14. Financial Statistics (cont.) ROA: 9.82% Management is using and selecting assets efficiently ROE: 24.04% Suggests possible stock price increase TIE: 58.36 Likelihood of bankruptcy is low Profit Margin: 3.83%

  15. Stock Performance • FY 06 return on invested capital was 18.7%, above the Computer and Electronics Trail sub-industry (16.7%) and the Consumer Discretionary sector (5.3%) • Superior gross margins • Reduction in the cost of new store openings • Improved sales productivity at new stores

  16. Stock Performance

  17. Recent Company News • March 27, 2007: Best Buy Acquires Speakeasy Inc. • April 4, 2007: Best Buy to offer Apple Computers in 200 stores • April 5, 2007: Best Buy Announces Regular Quarterly Cash Dividend Raise

  18. Risk Factors • Competition • Numerous rivals & strong price competition • Reliance • Reliance on suppliers • Rely on 4th Quarter Earnings • Economy • Sharp decline in economic climate resulting in declined consumer confidence

  19. Best Buy Goals • International Growth • Canada & China • Build small business capabilities • Best Buy for Business • Training 900 Microsoft Employees • Grow organically • Plan on establishing 90 new stores in North America in 2007

  20. Conclusion • Buy • No. 1 specialty retailer of consumer electronics • 18% market share of the consumer electronics retailer market in US • Potential growth through subsidiaries • High-quality Customer Service • Potential increase in sales

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