Richard Schulze, the founder of Best Buy, won't take "no" for an answer. Earlier this summer, Schulze had floated the idea of acquiring the electronics retailer he once led, but talks reached an impasse in mid-August. However, negotiations have been revived in the wake of Best Buy's dismal quarterly earnings and investor skepticism that its newly appointed CEO, Hubert Joly, can turn the company around. This week, Best Buy said it would give Schulze access to its financial information in what amounts to a green light for Schulze to make an offer. Yet the company still faces a threat from Amazon and other online retailers that sell the same goods for less money, and it's an open question whether Best Buy's founder can even save the company. Is a Schulze buyout a good idea?
No. Best Buy needs new blood: Schulze "knows the company well, and has been a motivator" of Best Buy as it grew and "became a leader in selling technology," says Walter Loeb at Forbes. But "the retail environment for technology has changed" and "competition is fierce through e-retailers like Amazon and eBay." Best Buy needs to "develop a stronger internet presence, close stores, and revitalize existing units," and it's not clear whether Schulze understands that.
"Schulze and Best Buy board bury the hatchet — for now"
But investors have more confidence in Schulze: When Best Buy announced the appointment of Joly, who has no experience in retail, investors "pushed the stock down by 10 percent," says Dhanya Skariachan at Reuters. Meanwhile, Best Buy stocks soared nearly 8 percent on the breakthrough in negotiations between Schulze and the company's board. At the very least, it indicates that shareholders believe Schulze can offer something more than the turnaround plan Best Buy is currently offering.
"Best Buy agrees to open books to founder Schulze"
Schulze must devise a better plan: With Best Buy opening its books, the pressure is on Schulze "to show he has a real deal up his sleeve," says Ryan Dezember at The Wall Street Journal. In addition to offering a feasible turnaround plan, he must find financial backers who believe in the project and are willing to bankroll it. The company "has pushed forward with its own plans for a turnaround" with Joly, and the onus is on Schulze to show that he can do better.
"Schulze cleared for Best Buy bid"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- 43 TV shows to watch in 2014
- How our botched understanding of 'science' ruins everything
- How I dug myself out of debt — and stayed that way
- 6 things the happiest families all have in common
- 6 super-helpful iOS8 tricks you probably don't know about
- This is what happens when Republicans actually enact their radical agenda
- The science of sex: 4 harsh truths about dating and mating
- The Obama administration's nonstop incoherence on ISIS
- The European Union was supposed to end nationalism. It gave it new life instead.
Subscribe to the Week