Novice Investing - Identifying Your Best Buy

Date: Monday 15th 2010f March 2010 07:26:25 AM

Identifying Your Best Buy - 12/28/2009

By: Hari Wibowo

		Best Buy Co Inc. 7601 Penn Avenue South Richfield, MN 55423 United States

Best Buy Co Inc. (BBY) is one of the largest consumer electronic retailers with more than 1000 Best Buy stores, 155,000 employees and revenue of $ 45.1 Billion. It competes with Radio Shack, Amazon.com electronic segment, Walmart electronic segment and Apple's stores.

Global financial crisis has presented opportunities for Best Buy, which drove archrival Circuit City into bankruptcy liquidation. Other smaller chains has withheld expansion while Best Buy is becoming more aggressive in courting customers. Internationally, Best Buy is having its presence felt in Canada, Mexico and Europe. Meanwhile, it aggressively expanded in China. Best Buy, the company, consists of several different companies grown through acquisition. It includes: Best Buy stores, Pacific Sales, Magnolia Audio Video stores.

Best Buy store divides its business into six revenue categories: 1.. consumer electronics: televisions, digital cameras, digital camcorders, DVD players, MP3 players, home theater audio systems, car stereo and satellite radio products. 2. home office: notebook, desktop, monitors, mobile phones, hard drives, networking equipment and other related subscription services. 3. entertainment software: video gaming hardware, software, DVD, CDs, digital downloads and computer software. 4. appliances: major appliances as well as small electrics. 5. service: service contracts, extended warranties, computer-related services, product repair, delivery and installation. 6. others: non-core offerings such as snacks and beverages.

From these categories, you might wonder what the biggest revenue driver is. Best Buy derived its revenue as follows:

Consumer Electronics: 36%
Home Office: 34%
Entertainment Software: 17%
Appliances: 6%
Services: 7%
Others: < 1%

The share of revenue for Home Office has continued to increase over time, at the expense of consumer electronics. As home entertainment converges into one PC, that is not a strange phenomenon. At the latest fiscal year, Best Buy revenue is hugely concentrated in the United States, accounting for 77.8% of total, followed by Canada with 11.5% of total. China showed huge potential with a 200% increase in revenue within two years, albeit from a lower revenue base.

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Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Best Buy Co Inc. (BBY) or any other securities.

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