Best Buy 2Q profit drops 90%

By Anne D'Innocenzio

Associated Press

Published: Tuesday, Aug. 21 2012 9:00 p.m. MDT

He said consumers remain "very cautious" and sales in the industry may be dampened because some people are holding back on spending as they await new releases in Apple's new iPhones, tablets and gaming. But he said that Joly brings "tremendous experience to the job" and that he'll build on a turnaround plan that the chain has already started.

That includes steps the company has taken since before the scandal with Dunn. In March, it announced a major restructuring that includes closing 50 stores, cutting 400 corporate jobs and trimming $800 million in costs.

In early July, Best Buy said it would lay off 600 staffers in its Geek Squad technical support division and 1,800 other store workers. The company also has been shrinking store size and focusing on its more-profitable products such as mobile phones.

But analysts — and investors — have been impatient. Analysts say some of these changes are too late. They also say that Best Buy needs to close more of its big-box stores, which no longer are necessary since people have shifted from buying big computers and TVs to snapping up smaller items like tablets and mobile phones.

Wall Street has been equally unforgiving of Best Buy's timing. Best Buy shares have lost nearly 70 percent of their value since their pre-recession peak of $56.66 in May 2006. On Tuesday, shares of Best Buy fell more than 3 percent, or 64 cents to $16.40, following the 10-percent decline on the day before when the announcement of the new CEO was made.

At the same time, the company is engaged in a public battle with its co-founder. Earlier this month, Schulze, who has a 20 percent stake in the company, made a takeover offer for the chain, offering $24 to $26 per share. Best Buy had said it was considering the offer, which values the company at $8.84 billion.

Best Buy and Schulze went back and forth in public announcements over the weekend.

In a statement issued by Best Buy Sunday, it laid out certain terms for acquisition talks to proceed. Schulze rejected the terms, citing a company requirement that he forgo taking any offer directly to shareholder for 18 months as unacceptable. The time frame had been reduced to January.

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