Image via WikipediaJust two years after its arch rival was knocked out of the ring, Best Buy (NYSE: BBY - News) is itself on the ropes.
The company revealed a problem last December that has left investors scrambling for answers. Even with bankrupt Circuit City out of the picture, the retailer was losing market share, especially in the key television and computing categories. Best Buy shares have since tumbled 21% and now trade at a mere nine times this fiscal year's consensus earnings.
Investors shouldn't assume Best Buy simply needs time to recover. Rather, the threats it faces are likely only to worsen. Take Amazon.com (Nasdaq: AMZN - News), whose relentless growth has undercut the raison d'être of specialty retailers. That is true both in books -- where Borders Group recently filed for bankruptcy protection -- and in electronics.
Indeed, Amazon's electronics and nonmedia revenue rose 66% to $18 billion last year, helping it lift market share in different segments. Its share of LCD TV sets, for instance, nearly tripled, to 3.7% at the end of 2010 from 1.3% in 2007, estimates research firm Traqline. Its share of portable audio devices rose to 11% from 4.6% in the same period.
http://finance.yahoo.com/banking-budgeting/article/112269/forecast-for-best-buy-worst-yet-to-come
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