We were surprised that Richard Schulze was willing to pay $24-$26 per share for the 80% of Best Buy (BBY) that he doesn’t own, especially after he was pressured into stepping down as Chairman of the Board in May. We are also confused that Dick Schulze knew about Brian Dunn’s relationship with a female employee and did not alert the audit committee. BBY’s board pressured Dunn into resigning due to the relationship and investigations into his conduct. According to the investigation “Dunn “violated company policy by engaging in an extremely close personal relationship with a female employee that negatively impacted the work environment.””
We normally don’t agree with such investigators, but when they are right, we give them credit. In our humble opinion, we think that Dunn’s alliances with his fellow co-worker may have been a fun diversion for Dunn, but it distracted from his management duties and probably explains why BBY’s profits over the last 3 years have collapsed, along with its stock price. However, we see ourselves as a solutions oriented firm and we have advice for both Brian Dunn and BBY’s board. For Brian Dunn, we suggest that he contact Mark Hurd formerly of H-P (HPQ) to get a fair and balanced assessment as to why workplace romances don’t work out so well and for Best Buy’s board, we advise them to accept Schulze’s offer.
Corporate and Business Highlights and Lowlights
BBY’s revenue and profits have been steadily declining since the Q4 2011 period and its Q2 2013 results continued this tradition. Best Buy saw its quarterly revenues decline in the most recent quarter by 2.85% year-over-year due to a 3.2% decline in comparable store sales.
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