Wednesday, December 5, 2012

Best Buy Co., Inc. (NYSE:BBY) sale under a cloud, Shares Down

Best Buy Co., Inc.(NYSE:BBY) seems to be in serious trouble. The online electronics retailer is already up for sale. Its woes have become worse with a research group saying that sales of consumer electronics had fallen on Black Friday, a day seen as kicking off the shopping season in the United States.

There was also a report in the Wall Street Journal that a private equity firm which had been backing a potential bid for the company might be dropping it.

Whatever the veracity of these reports, the net impact was that the shares of the company fell more than 5 percent on Tuesday, after already having slipped on Black Friday.

Shares fell 6 percent, to $12.15 in Tuesday’s trading. The stock has fallen to almost half its value since the beginning of the year.

Any dip in valuation at this point creates difficulties for the company in being acquired.

Stephen Baker, vice president of industry analysis at research firm NPD Display, commenting on the slow start to the shopping season, said, "In an unbalanced market, where just a few categories deliver significant dollars, and even fewer offers any growth, the ability to deliver positive results will remain difficult for companies exposed to the entire consumer electronics marketplace."

The Journal also reported that Cerberus Capital Management is in talks to join a bid for U.S. brokerage Knight Capital Group, citing people familiar with discussions.

Cerberus has previously been reportedly backing a bid by Best Buy founder Richard Schulz, who is taking a shot at buying his company.

But if Cerberus is eying Knight Capital instead, then that puts a question mark on Schulz' bid, unless he finds another backer.

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