Best Buy Goes After the Geeks

I've previously argued that Best Buy (NYSE: BBY  ) deserved more respect as an investment -- but I might have been wrong. The Wall Street Journal recently reported that the electronics giant has acquired a bad habit of suing the very same geeks who represent some of its best customers.

According to the WSJ, Best Buy's taken legal action on those who've used the word "geek" in their marketing lingo. The electronics chain claims that such efforts infringe on its "Geek Squad" trademark. Online company Newegg.com is just the latest target; over the past few years, Best Buy's pursued businesses with names or services like Rent a Geek, Geek Rescue, Speak With a Geek, and Geek Housecalls.

Any self-respecting geek knows that Best Buy didn't invent the word. It's a commonly recognized and respected term for the technologically savvy. Most geeks are proud to be geeks, and certainly don't want to be sued for trumpeting their credentials. And even non-geeks need a little geek help from time to time.

The parade of lawsuits also reflect badly on Best Buy as an investment. One of the folks interviewed in the article described the retailer's actions as "a bit desperate." No kidding.

It's never a good sign when any company or industry starts hurling lawsuits at the very folks they'd like to attract as customers. The music industry's litigious ways made me think poorly of investments in music companies, or businesses whose music units took part in the RIAA, like Warner Music (NYSE: WMG  ) and Sony (NYSE: SNE  ) . Companies should evolve, not litigate.

When covering Best Buy's most recent quarter, I noted that the retailer looks better than electronics retailers like Conn's (Nasdaq: CONN  ) and RadioShack (NYSE: RSH  ) . Several Foolish readers disagreed, pointing to its formidable online competition from rivals like Amazon.com (Nasdaq: AMZN  ) . My fellow Fool Rick Munarriz subsequently argued that maybe Best Buy is more value trap than value stock.

Needless to say, I'm beginning to wonder whether I spoke too soon. Heavy-handed corporate lawsuits like the geek-oriented ones the WSJ described do strike me as desperate, if not downright sad. Maybe Best Buy's better days are behind it. If it's attacking the geeks, it's kind of attacking its own peeps. That's never a smart idea.

Sound off on geek persecution, corporate-style, in the comments box below, or keep an eye on Best Buy by adding it to your watchlist.   

The Motley Fool owns shares of RadioShack and Best Buy. Motley Fool newsletter services have recommended buying shares of Amazon.com and Best Buy, while other services formerly recommended Best Buy. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned. For more on this and other topics, check back at Fool.com, or follow her on Twitter: @AlyceLomax. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (5) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On June 22, 2011, at 12:36 PM, KingOfPizza wrote:

    Geeks don't shop at BBY; BBY carries low- to mid-grade computers and components. I went in last week on a whim looking for a good video card and not only did they not have any of the recent models, they were heavily overcharging for the 3 year old designs they did carry. No self-respecting tech junkie is going to overpay for old components.

  • Report this Comment On June 22, 2011, at 2:41 PM, stan8331 wrote:

    Definitely agree. Pouring enterprise resources into litigation over such a common term tells me that Best Buy's management is focused on desperately clinging to what they have rather than looking toward the future to find an advantageous place for the company in a rapidly changing competitive landscape.

  • Report this Comment On June 22, 2011, at 5:36 PM, DJDynamicNC wrote:

    Excessive litigation is definitely a sign of a company on the defensive, and a good warning sign.

    Also, KingOfPizza is right - Best Buy uses the word to glom onto its tech cachet, but genuine geeks don't go there - they shop at NewEgg or TigerDirect. So BestBuy is picking a smart target in NewEgg, in the short term. Nonetheless, a bad sign to be going after lawsuits all the time.

    Respect to you for being upfront about making a missed call. Happens to everybody, but not everyone owns up.

  • Report this Comment On June 26, 2011, at 7:23 AM, TMFCop wrote:

    Although I wasn't overly impressed with Best Buy's earnings results -- that big stock buyback in the quarter really was the only reason for the earnings beat -- I don't see the lawsuits as an act of desperation. Any other consumer electronics chain, or business trying to service such products and using a "Geek" mark would dilute what has arguably been one of Best Buy's best performing businesses.

    Now that might not be saying much about the overall business, but Best Buy has invested a lot of capital in the "Geek Squad" brand and variations on that but other consumer electronics businesses could very well lead to confusion amongst consumers.

    It's precisely because Best Buy has made its Geek Squad such a popular addition to its offerings that rivals want to cash in on that.

    Had they also gone on to attack "Nerds R Us" (if that even exists) I'd agree with the premise as Best Buy being desperate; but because they're limiting their assault to Geeks, I think Newegg knew exactly what it was trying to accomplish and Best Buy was justified in protecting its trademark.

    Rich

    (long BBY)

  • Report this Comment On June 26, 2011, at 7:25 AM, TMFCop wrote:

    Graf 2 should read "and variations on that *by* other consumer electronics businesses..."

    Damn inability to preview or edit comments! ;>

    Rich

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