Best Buy 2Q Profit Falls 19%
Minneapolis On the heels of Monday’s news that Best Buy would acquire online music-sharing site Napster Inc., for about $126.8 million in cash, Best Buy, Inc. announced Tuesday that its second-quarter profit fell 19%.
The company attributed the losses to expenses related to rolling out Best Buy Mobile to all stores to capture cell-phone sales. Best Buy’s sales rose in the quarter, topping analysts’ expectations.
Same-store sales also climbed 4.2%. Revenue also rose 12% to $9.8 billion as consumers bought more flat-panel TVs, laptops and cell phones, the company said.
Best Buy earned $202 million in the quarter ended Aug. 30, down from $250 million in the same quarter a year ago.
Thomson Reuters says analysts expected revenue of $9.67 billion.
Going forward, Best Buy said it is cutting lower-priority expenses in the second half of the year even as it remains on track to invest for growth projects. Best Buy said its increased spending was warranted and credited growth initiatives such as Best Buy Mobile in helping it to gain U.S. market share by 1.6 percentage points.
“We have some work to do in terms of managing our expenses amid a challenging macroeconomic environment,” said Brad Anderson, chief executive of Best Buy, in a statement.
The company kept its full-year profit forecast of $3.25 to $3.40 a share, but said second-half same-store sales gains would be lower than the first half’s because of the macroeconomic headwinds, the end of the government stimulus checks, and because one week of post-Thanksgiving shopping this year is shifting back to the company’s fourth quarter.
Walgreens throws hat into Longs buyout ring
DEERFIELD, Ill. Walgreens has proposed to acquire all of the outstanding shares of Longs Drug Stores for $75 per share in cash for a total purchase price of approximately $3 billion including the assumption of debt. The offer, which is subject to standard regulatory approvals and the completion of due diligence, represents a $3.50 per share premium over the cash purchase price to be paid to Longs shareholders under the proposed acquisition by CVS/Caremark announced on Aug. 12.
“We believe the combination of Walgreens and Longs is a highly compelling transaction that is superior to the pending transaction with CVS/Caremark, accelerates Walgreens expansion into high growth markets and delivers meaningful cost synergies,” said Walgreens chairman and ceo Jeffrey Rein.
Walgreens is working with Lubert-Adler Management Company, LP and Klaff Realty, LP to address any potential store sales in connection with the transaction.
Goldman, Sachs & Co. is serving as financial advisor to Walgreens on this transaction, and Weil, Gotshal and Manges LLP is serving as its legal advisor.
Netflix, Amazon to run widgets on Yahoo!
SUNNYVALE, Calif. Yahoo! is allowing companies like Apple and Netflix to add widgets to its pages enabling users to manage their queue of movies from those company without leaving the Yahoo! page they’re on.
According to reports, the changes, which are the first major alterations to Yahoo’s pages in more than two years, will take place over the next few months.