Best Buy Bankruptcy – Dead or Born Again?

by Dori Tery on November 24, 2012

Is Best Buy Bankruptcy About To Happen?

Experts continue to argue if Best Buy is headed towards bankruptcy. In August 2012, the company announced that it was suspending its recent plan to buy back its own stock, leaving experts wondering if Best Buy bankruptcy rumors announcement may be very near. The company has spent $6.4 billion dollars buying its own stock in the last five years. In addition, the company’s stock earnings went down to $0.20 per share, at a time when experts expected the shares to be at $0.31 per share. Additionally, revenue for the company was below what Wall Street experts had forecasted. These experts expected the revenue to be at $10.61 billion, but revenue was only at $10.55 billion. This represents a fall of 3 percent for the year. Same store sales fell 3.2 percent over the same time a year before, and the operating margin was half what it was the year before. The company still expects to have approximately $1.35 billion in free cash flow this year. They hope that is large enough to stop them from having to declare Best Buy bankruptcy.

Best Buy bankruptcy was forewarned when the company closed several stores throughout 2011 and the early part of 2012.This move resulted in over 400 people losing their jobs although the company benefits from the reduced payroll. The company is attempting to fight back, however, with a new store model in two of its key cities. The new stores in Minneapolis, Minnesota, and San Antonio, Texas, will be about 20 percent smaller than the traditional Best Buy stores. Best Buy is hoping to operate these stores at a lower cost helping them to not declare Best Buy bankruptcy. The company plans to put these stores closer together than they do the large box stores.

The company also plans to revamp their website to try to eliminate the need for Best Buy bankruptcy. The company is struggling with problems from online competitors like Amazon. Best Buy employees are reporting that many of the consumers are coming into the store to window shop before going to online competitors to make the purchase often at a reduced cost. Experts are concerned that Best Buy cannot overcome this trend forcing the company to declare Best Buy bankruptcy.

Best Buy Betting on CinemaNow to Stop Best Buy Bankruptcy

Best Buy is also hoping to stop the need to declare a Best Buy bankruptcy with its CinemaNow service. This service, similar to the popular Blockbuster, allows consumers to watch many hit movies and television shows on the Internet devices. CinemaNow offers consumers a chance to watch over 14,000 movies from major entertainment providers and watch many television shows the day after they occur. In addition to popular movies and television shows, CinemaNow also offers subscribers a chance to watch some concerts life.

best buy bankruptcyBest Buy is also placing a major emphasis on its Five Star stores that the company is operating in China, hoping to stop them from having to declare Best Buy bankruptcy. The company currently operates 131 stores in eight provinces, positioning it as the third largest consumer electronics and appliance retailer. Like the stores in the United States, a major emphasis in the stores is on consumer electronics including cell phones, cameras, laptop computers and other digital communication devices. The company also offers appliances and air-conditioners. Best Buy hopes that profits realized from their stores in China will help the company put off Best Buy bankruptcy. The company hopes to establish other stores similar to Five Star throughout the world. Due to down economic, you will continue to hear many rumors  like radio shack bankruptcy, office max bankruptcy and other big companies.

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