Worst Buy

I was on CNBC the other day talking about the ongoing suckfest that is the corporate predilection for share-buybacks.  Usually companies buy back a ton of stock at the worst time (when they are most confident and have the highest cashflow) or for a more insidious reason – to mask the issuance of employee stock options, a huge wealth transfer from shareholders to executives.

Michael Comeau at Minyanville takes a look at the flaming wreckage that is Best Buy’s ($BBY) stock buyback plan as the company implodes and becomes little more than a “showroom for Amazon” as someone else put it.  Best Buy is around $23 a share right now down from 45-ish last November.

As I impled above, Best Buy is going crazy buying its own stock while its outlook continues to deteriorate.

Look at the trend:

In fiscal 2011, Best Buy repurchased 32.6 million shares at an average price of $36.20 a share. In the first quarter of 2012, Best Buy repurchased 16.6 million shares at an average price of $30.43 a share. And today, we learned that in the second quarter, Best Buy repurchased 12.7 million shares at an average price of $28.31 a share.

Real earnings power weakens, the stock keeps going down, but management just keeps on buying.

All told, that’s over $2 billion worth of stock purchases at an average price of $33.65 a share. That means Best Buy’s down over 30% on its own stock — and it wants to buy more.

Oh god please make them stop buying stock…they are Barnes & Noble with blue uniforms and they think the best use of their cash is throwing it away on a declining market capitlization?

Oy vey.

Source:

Best Buy Must Stop Purchasing Its Own Stock (Minyanville)

See Also:

What’s the Deal With Stock Buybacks?  (CNBC via TRB)