Best Buy makes mobile moves in UK
The electronics superstore chain takes over a partnership with British phone retailer Carphone Warehouse, announces plans to close 11 UK stores and bolsters its Geek Squad.
By Antoine Gara, TheStreet
Best Buy (BBY) Monday said it would take ownership of a mobile-phone sales joint venture with British phone retailer Carphone Warehouse for $1.3 billion and also said it would buy mindShift Technologies for $167 million to bolster its Geek Squad and Best Buy Business services.
The Minneapolis, Minn. electronics retailer said it would also cut plans to expand its European operations by closing 11 U.K.-based pilot big box stores. Currently, Best Buy Europe has 2,500 "small box" stores that will remain. While Best Buy's U.S. sales fell slightly in 2011 to $37.2 billion, its international sales increased nearly 6% to $13.1 billion.
Previously, Best Buy had entered into a profit-sharing agreement with the Carphone Warehouse in 2007, where it would split Best Buy Mobile sales in the U.S. and Canada. In a press release announcing the deal, Best Buy said it believes there is a "significant untapped opportunity" as connections migrate from phones to other connectable devices such as tablets, laptops, TVs and e-readers.
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Shares in Best Buy were down 2.4% to $26.65 Monday morning. Its shares are down over 20% year to date.
Best Buy also announced a new venture called "Global Connect" with its former European partner Carphone Warehouse in an effort to provide global customer service expertise.
“We are aggressively ramping up our growing connections capability to support consumers' increasingly connected lives across the entire range of devices entering the marketplace," said Brian J. Dunn, chief executive of Best Buy.
The purchase of I.T.-services company mindShift Technologies also falls under this strategy. Best Buy said the acquisition will help it expand further into the vast small and mid-sized business market.
The purchase follows Best Buy's acquisition of Geek Squad in 2002 and bolsters its push into technology services for small and mid-sized businesses in the legal, health care, financial and education sectors. Currently, Best Buy estimates that the market for such services is $400 billion.
Some previous Best Buy acquisitions haven't fared so well. In 2001, the company bought Musicland, a mall-based retailer of CDs, in early 2001 for $696 million just as music sales were set to go online through Apple's (AAPL) iTunes.
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