Is Best Buy's founder planning to take it private?

Earlier this month we reported on some of Best Buy founder Richard Schulze's troubles, and how he might be planning to leave the ailing company earlier than expected. According to the Wall Street Journal's sources, though, it might all be part of a crazy master plan that could save the company.

Although Best Buy stock has actually done better in the last month or so than it has in the last three years, it's still facing a ton of store closures, and the future doesn't look any brighter.

The company's board of directors hasn't been exactly supportive of Schulze, partly due to his failure to inform them of former CEO Brian Dunn's inappropriate relationship with an employee, and The Wall Street Journal suggests that his plan involves dumping the whole board and taking control of the company himself.

Despite a changing market that's favoring online commerce and relegating brick-and-mortar stores to little more than glorified showrooms, Schulze obviously has an emotional connection with the company he created, and that's plenty of reason for him to believe that he can turn it around.

Taking the company private would mean that Schulze would have to buy the other 80% of the company that he doesn't already own. Even with an ailing business like Best Buy, that's not chump change, and Schulze would no doubt need some help from other investors. If he really is planning to take Best Buy private again, he'll first have to convince enough people that he's capable of turning it around.

Via: The Huffington Post

Source: The Wall Street Journal

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Well, BB's stuck in the past, & needs to figure out how it's going to compete in the future if it wants to avoid going the way of its old competitor, Circuit City, which had to close its doors. Whether you're an on-line &/or B&M retailer you need to have a compelling reason for customers to want to shop there -- something BB doesn't do all that well nowadays. Potential customers can more easily go to Kmart, Walmart, Target etc. for almost everything BB sells, And at those other B&M retailers they'll be able to find the same products cheaper, be able to do other shopping at the same time, visit the in-store pharmacy, pick up something for dinner, & get through checkout faster. For large appliances there's Sears, Home Depot, & Lowes to name 3, while for PCs/laptops & office related stuff there's Office Depot, Staples, & OfficeMax. And that's just some of their primary B&M competition, not including on-line or regional &/or local stores. In a nutshell Best Buy's stuck with their original biz when everything, everyone around them evolved.

For those still trading in the stock market [Not the bank to bank or brokerage to brokerage stuff that keeps the stats inflated], BB's future doesn't look that bright so BB's stock prices go down, hurting the amount of capital they have to work with. Going private makes a lot of that pressure go away.

If he really is planning to take Best Buy private again, he'll first have to convince enough people that he's capable of turning it around.

The bar's lower than it was before the world's economies started to tank. When times were good there were lots of places to park money & get a good or decent return -- today not so much... Banks aren't paying much if any interest when you consider inflation, the same with low risk bonds, & Real Estate is hardly booming. Investing in a BB buyout you'd at least have the physical stores & inventory to liquidate if things went south, which you wouldn't have if you invested in a startup.

Killing off brick and mortar stores is a bad idea. I like being able to walk into the store, buy an item and go home with it rather than buying an item sight unseen and having to wait for delivery several days later. And if I want to return an item it's a lot easier and faster to take it back to the store than to have to ship it back to the online seller and wonder if it got there and if I'll actually get my money refunded. I usually buy onine only when an item is either unavailable at a local store or is so much cheaper that it would be crazy not to buy it online.

Zetaprime said,
Killing off brick and mortar stores is a bad idea. I like being able to walk into the store, buy an item and go home with it rather than buying an item sight unseen and having to wait for delivery several days later. And if I want to return an item it's a lot easier and faster to take it back to the store than to have to ship it back to the online seller and wonder if it got there and if I'll actually get my money refunded. I usually buy onine only when an item is either unavailable at a local store or is so much cheaper that it would be crazy not to buy it online.

Well, 99% of the time you can find most anything cheaper on-line, but the sight unseen aspect bothers a lot of people. So they use Best Buy & other B&M stores as showrooms, or to buy something, try it out, & return it after they buy on-line. Rather than RMA & ship a return for a defective on-line purchase, some people buy the same product new at BB, then return the defective one for a refund. That stuff plus theft drives up costs & prices, making sure that B&Ms are more expensive than on-line stores that don't have to deal with that sort of thing.

IOW the very things you like about B&Ms like BB is what's working against them.

Only thing I bought at BB in years was HHD when there was a sale or I did not want to wait for headphones in the mail so i bought in the store.

as someone on the inside i laughed and stopped reading here "Although Best Buy stock has actually done better in the last month or so than it has in the last three years, it's still facing a ton of store closures, and the future doesn't look any brighter." you guys are funny. BBY has closed the stores it needed to and is opening more smaller mobile stores, what does a "ton of stores" even actually mean? Amateur journalism at its best.

Yeah damn amateurs.. haha

Put wait... The "pros" love making stuff (stats) up too so how am I suppose to tell the difference?

theres no reason for these stores to be that big. the stores should be half the space they have now, or even less. just alot of product sitting around.

downhillrider said,
theres no reason for these stores to be that big. the stores should be half the space they have now, or even less. just alot of product sitting around.
I disagree. IMHO these stores are never big enough. They don't offer the wide selection available online (not that I think it would even be possible). I only go to Best Buy when I need something in a pinch and I need it now because I know my selection will be limited and I'll be paying more than I should. If I have time to prepare for my purchase then I'll do my research and almost always buy from one of a few trusted online retailers and Best Buy isn't one of them. They're great for when I need it right this second but past that I have no use for them although I read don't want them to go away. Where else can I use to buy a wireless AP, NIC, and a game controller at 9 pm on a Tuesday night? Target? Walmart? No way!!

Tim Dawg said,
I disagree. IMHO these stores are never big enough. They don't offer the wide selection available online (not that I think it would even be possible). I only go to Best Buy when I need something in a pinch and I need it now because I know my selection will be limited and I'll be paying more than I should. If I have time to prepare for my purchase then I'll do my research and almost always buy from one of a few trusted online retailers and Best Buy isn't one of them. They're great for when I need it right this second but past that I have no use for them although I read don't want them to go away. Where else can I use to buy a wireless AP, NIC, and a game controller at 9 pm on a Tuesday night? Target? Walmart? No way!!

Personally,
I agree with that whole post except for the part where I wish Best buy would go away! Nothing but a high priced, boat load of nothing you need, dumb a** wanna be geeks, setting around!

Bring back the real Circuit City stores any day!! Around here, Circuit City blew BB out of the water on anything and everything!

downhillrider said,
theres no reason for these stores to be that big. the stores should be half the space they have now, or even less. just alot of product sitting around.

B&M Retail doesn't work that way or stores like Sears would [still] be primarily a catalog biz. Retail stores make money because enough people don't go in & buy just what they planned on buying -- that's why stores offer sale prices on stuff that are so low they lose money -- they need to get you in the door where you'll see everything else they have to offer, & buy a bunch of stuff they will make a profit on.

cork1958 said,
Bring back the real Circuit City stores any day!! Around here, Circuit City blew BB out of the water on anything and everything!

The problem CC ran into was too much debt -- they couldn't refinance that debt, couldn't find someone(s) willing to take them over because of that debt, so the only thing they could do was close the doors. They could have been the best around & it wouldn't have mattered -- for whatever reasons [might have been just bad luck] they took on too much debt at the wrong time. Kmart was in a similar situation because of bad mgmt, but they found a savior in Sears who paid the bills, & they're still around years later.