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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (55218)	11/8/2001 1:55:25 PM
From: Sam Citron	Respond to of 70976

Why is BBY a suitable short? This is a stock that I have shorted 3 times successfully this year and that I last shorted at 57.30 last week. First from a top-down business model perspective, I am a bit biased against the retail sector generally in a country that has more sq footage per capita devoted to retail than anywhere on the planet. And BBY sells mostly consumer electronics items that even its Joe Sixpack customers know can usually be bought more cheaply and efficiently online (except perhaps very large screen TVs that are hard to ship). Admittedly CE is attractive sector as it delivers benefits of Moore's Law to the consumer, but entry barriers are nil and competition keeps margins razor tight. Next, it appears to be one of the more expensive stocks in this sector with PE in upper 30s. From a transparency perspective, BBY is one of a few retailers that does not report same store sales on a monthly basis, but only quarterly. On 9/6 they reported same store sales growth up only 2.6%. I have my doubts it will be much better next quarter. My reasoning is pretty simple -- consumers more tapped out with negative wealth effect and beginning to have job worries. Countering this is the extraordinary monetary and fiscal stimulus, some of which is bound to flow into more DVD buying. But with BBY approaching all time highs and very serious resistence in the 65-70 area bigcharts.marketwatch.com, I just think the risk exceeds the reward. But we will see. Historically retail is a very reliable early cyclical performer so that is what is hurting my short play right now. Sam

To: Cary Salsberg who wrote (55218)	11/8/2001 2:17:06 PM
From: Sam Citron	Respond to of 70976

Speaking of retail - New trend spotted: Same Day Delivery I recently used a $15 coupon and free shipping offer to replace my laser printer toner cartridge on my HP 5MP laserjet. It was delivered exactly 24 hours later by an oversized Palm (with barcode and wireless modem) toting Office Depot delivery man, who said that within 2 months they are going to be offering same day shipping, still in their own trucks from their Fremont warehouse. Impressive. With this kind of service and (at least temporary) price advantage, who is going to bother going to the store anymore?