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Non-Tech : BBY -Best Buy
BBY 79.04+0.5%Nov 7 3:59 PM EST
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To: Im-patient who wrote (30)11/27/1996 4:40:00 PM
From: DanZ   of 980
 
Fred, Sorry for the delay in responding to your questions.

You asked about Best Buy's no payment, no interest loans on sales of personal computers. You made some very good points about what will happen if consumers default on the loans and then the computers are worthless because of obsolescence. Best Buy has a 30 day return policy, so the company assumes the risk of these loans for 30 days. But after 30 days, a bank or credit agency underwrites the loans and assumes all liability for them. At that point, the transaction goes into the cash account on the balance sheet and the company is at no risk if the consumer defaults on the loan.

But even though BBY doesn't assume the risk of these loans, I still think the stock looks very bad on the chart and will trade lower. I've been saying this since the stock was at 16 and I'm still saying it today. I think it will trade to at least 11 and maybe as low as 10.

Dan
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