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Non-Tech : BBY -Best Buy -- Ignore unavailable to you. Want to Upgrade?

To: C who wrote (788)	6/4/1999 12:12:00 PM
From: Greg Thornton	Respond to of 980

C (whoever you are!), Please note that in their announcement they state that sales are up only 23% over last year. This is in line with analysts predictions for long term growth. The large increase in earnings is due to the fact that they have cash in the bank and are earning interest rather than paying it to someone else (as they were last year) and also because of other improvements in efficiency. It will be difficult if not impossible to improve the cost side of their business significantly. If their revenues are only growing at 20-25% per year they do not deserve a P/E of over 50 (adjusted for the $1.14 in earnings that is assured by the prediction of $0.20 for Q1). The year over year comparisons next year will not look as good as they do now, IMHO. This is the basis for any prediction of a pullback to at least the mid $40s, possibly lower. And this assumes that the economy remains strong. I am concerned about the trend by all retailers to offer extended financing for free. This indicates to me that the strong demand that was there earlier in the year without such enticements is slowing. Whether or not it is slowing enough to impact sales before the seasonal recovery toward the end of the year we will have to wait and see! If the economy slows appreciably or interest rates are raised this summer this might cause problems for the retailers as well. In the short term, however, the momentum has certainly shifted for BBY! Greg