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Best Buy (NYSE:BBY) announced slightly lower same-store sales during the holiday season, and investors dumped BBY stock in a hurry. <\/p>\n
The drop was minor, less than 1%.But it was unexpected, and missed analyst estimates of a top-line gain of 0.5%. <\/p>\n
For the quarter, Best Buy reported earnings of $607 million ($1.91 per share) on revenue of $13.48 billion. This compared with earnings of just $479 million($1.40) but revenue of $13.62 billion a year earlier. More importantly, while adjusted profits of $1.95 per share easily beat estimates of $1.67, revenues fell short of analysts expectations, also for $13.62 billion. <\/p>\n
The revenue shortfall meant analysts threw Best Buy stock into the dumpster with retailers such as Macys Inc. (NYSE:M), with shares down almost 5% early Wednesday, to $42.40. During the Christmas season, on Dec. 8, the shares traded as high as $49.31. <\/p>\n
Were the analysts right, or did they just offer smart investors a bargain? Is Amazon.com, Inc. (NASDAQ:AMZN) about to kill all retailers, or is this just a case of Moores Law in action? <\/p>\n
Best Buy even trounced the higher earnings whisper number of $1.66 per share. But actual estimates were all over the map, with some very bearish about the companys ability to cut costs and others bullish on margins. <\/p>\n
The Zacks Metric Model noted that BBY stock had beaten estimates for four quarters, and that shareholders had been rewarded with a 36% gain. In particular, Best Buy was posting big gains in online sales the so-called omni-channel approach and Zacks was expecting an upside surprise. <\/p>\n
On the bottom line, of course, Best Buy delivered one. And considering the sizable beat, BBY shares shouldve rocketed higher. <\/p>\n
But something elseis at play and that something is Moores Law. <\/p>\n
Moores Law, which turned 50 in 2015, was described by Intel Corporation(NASDAQ:INTC) co-founder Gordon Moore as an expected increase in circuit density on silicon, doubling every 18 months ago as far as he could see, in 1966. <\/p>\n
But, as I have been writing for many years now, Moores Law also turned traditional economics on its head.Moores Law is deflationary, and the deflationary impact grows with time, as integrated circuits are incorporated into more and more things, and as the impact is compounded by its use in various ways. <\/p>\n
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Best Buy Inc Co (BBY) Stock Dives Into the Retail Dumpster - Investorplace.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Popular Posts: Recent Posts: Best Buy (NYSE:BBY) announced slightly lower same-store sales during the holiday season, and investors dumped BBY stock in a hurry. Continue reading