Best Buy's profits down 90 percent
The bleak earnings report comes just a day after Hubert Joly was named CEO.
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Best Buy has been taking a PR beating all year long, and the damage is now starting to manifest itself in dollars and cents.
A new earnings report shows that the company's profits fell a whopping 90 percent during the second quarter this year, from $130 million in 2011 to just $12 million this year. The news prompted Best Buy to announce it won't forecast profit for the second half of this fiscal year and will suspend its share buy-back program.
The bleak earnings report comes just a day after Hubert Joly was named Best Buy's new CEO. Joly comes to Best Buy after a successful tenure as CEO of Carlson, a Twin Cities-based hospitality and travel company.
But the appointment of Joly hasn't reassured investors about the long-term health of Best Buy. The company's board remains in talks with founder and former chairman Richard Schulze about a possible shareholder buyout that would allow Schulze to take the company private, though reports over the weekend indicated the negotiations have reached an impasse.
"The new strategic plan that [Best Buy's board is] trying to execute does not seem to be gaining material traction," John Tomlinson, an analyst at ITG Investment Research in New York, told Bloomberg. "The struggle between the former chairman and current management isn't something that is going to go away any time soon."
After he was named the next CEO, Joly told reporters he enjoys challenges. The one he faces in trying to turn around Best Buy is growing more daunting by the day, as the company's stock fell nearly 10 percent after news of the earnings report circulated this morning. For the year, Best Buy's stock is down 22 percent, not counting today's dip.
It's been a sudden and steep fall for Minnesota's third-largest company. For the sake of the Twin Cities' economy, let's hope that either Joly or Schulze finds a way to dig Best Buy out of the hole before it's too late.
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