Best Buy's (BBY) Warms Up to Schulze as Options Evaporate

August 23, 2012 7:31 AM EDT
Shares of Best Buy Co. Inc. (NYSE: BBY) are higher early Thursday on reports that talks with founder Richard Schulze have resumed on due diligence.

Just last week the two sides were bickering about due diligence. Schulze complained that Best Buy's board initially proposed an 18 month standstill, which he said was "completely unacceptable in light of the fact that urgent change is needed at Best Buy and value is eroding further every day that change is not effected." Best Buy said its requests were customary.

Today's about-face comes amid dismal second quarter earnings from the embattled electronics retailer. Second quarter revenues fell 3 percent to $10.547 billion, versus $10.856 billion last year and the consensus of $10.63 billion. Adjusted earnings per share were $0.20, down 49 percent from the $0.39 reported last year and well below the consensus of $0.31. The company also lowered expectations for the year and said id does not intend to further provide or update earnings guidance for fiscal 2013.

Shares of Best Buy fell 13 percent this week as a result of the earnings and outlook. Now below $18/share, the stock is sharply below the $24-$26/share Schulze said he was prepared to pay.

In pre-open action Thursday, Best Buy last traded at $18.15 - up 2.43 percent.

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