Why Best Buy Shares Fell

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Investors were tossing aside shares of Best Buy (NYSE: BBY  ) yet again today, as the big box retailer fell 10% on an earnings warning and a reshuffle at the executive level.

So what: Management said same-store sales and overall revenue would continue to decline in the third quarter by a similar pace as the first half of the year, about 3% to 5%, and the company also jettisoned two senior executives in a move to streamline operations. CEO Hubert Joly said, "One thing I have learned in helping turn companies around is that a business needs to have a nimble organization," adding that the change will improve communication with customers and front-line employees. and speed its transformation efforts.

Now what: Things have gone from bad to worse for the electronic retailer, as management gaffes have made an already weak competitive position even tougher. Competition from Amazon.com (Nasdaq: AMZN  ) has been undermining the bricks-and-mortar retailer, which looks far from finding a silver bullet to save itself. Perhaps the only thing investors can count on at this point is the buyout offer from Founder Richard Schulze. who offered to take it private for $24 to $26 a share. Operationally, there seems little reason to believe in a comeback.

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