Before the opening bell this morning, electronics retailer Best Buy (BBY) reported results for its fourth quarter, which came in above analyst estimates as sales in the U.S. improved.
While investors were eager to see the company's quarterly numbers, what they were really interested in was the status of a potential buyout by the company's co-founder, Richard Schulze. Since departing the company last year, Schulze has made it clear that he wanted to the company private, but it seems as though this will not take place, at least for now.
Schulze, who still owns 20% of the company, had until last night to make a formal offer for the company, but in the end, no offer was made.
He had previously said he would be willing to pay up to $8.8 billion for the company, but his group of investors lost enthusiasm for the deal based on the levels of debt that would be incurred in taking the company private.
Best Buy has been struggling in recent years to compete against online rivals such as Amazon.com, and Schulze has publicly said he is very concerned about the direction in which the company is headed.
While the company is without a doubt in trouble, it does appear as though it is moving in the right direction, at least in the fourth quarter. It saw revenues at U.S. stores open 14 months or more rise by 0.9% during the quarter, the biggest quarterly increase in the past 11 quarters.
While it did lose $1.21 per share during the quarter, that loss was much better than the $5.17 loss during the same period last year.
Total revenue rose 0.2%, which while not incredibly impressive, is still moving in the right direction.
The quarterly results go a long way toward improving investor confidence in the company's new CEO, Hubert Joly, who assumed control of the company last August.
Instead of cutting employee count in Best Buy stores, Joly has been reducing jobs in the company's home office, and has been increasing the training of employees in stores. He believes that having a better-trained workforce will help the company stop the trend of consumers using Best Buy stores as showrooms for products they will buy online.
He is also trying to boost Best Buy's online presence, and during the quarter the company saw an increase of 11% in online sales. Increasing online sales is vital for the company since its biggest competition is coming from online retailers.
For Schulze, it appears as though his dream of regaining control of the company he helped found 47 years ago has come to end. Best Buy left the possibility of future negations open, but I believe it is highly unlikely that Schulze will make another run at taking the company private.
The deadline running out on Schulze is most likely the best thing for everyone involved. It does appear as though the changes Joly is making are starting to help, and he deserves the chance to keep trying.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors. Follow him on Twitter at @MFatMICenter.