Best Buy's (NYSE:BBY) founder may be turning to Plan B in his goal to assume control of the meandering consumer electronics retailer.
The Wall Street Journal reported -- and sources later confirmed to Reuters -- that Richard Schulze could be moving away from an outright bid to take Best Buy private.
He's not walking away. He still has his roughly 20% stake in the chain that has struggled in recent years as price-savvy consumers turn to online shopping and digital distribution makes physical media purchases less popular. In fact, the sources claim that Schulze is trying to turn many of the investors that he was hoping would join together to buy out the company to take minority positions in the company.
This isn't a retreat at all if he's trying to infiltrate the ranks of Best Buy investors with agreeable folks who happen to have deep pockets. Best Buy's stock may have initially taken a hit yesterday on the news, but the stock bounced back early on Thursday.
However, taking a longer path toward eventual privatization isn't going to serve today's Best Buy shareholders well. The model's shortcomings are real, and Best Buy's board should've taken Schulze up on his offer to take out the retailer between $24 and $26 a share last summer.
Shares rallied last month after Best Buy merely posted flat comps for the nine-week holiday shopping period. An improving economy is also leading investors to believe that Best Buy will return to its glory days.
It's not just about the showrooming trend. Sure, that's happening. Amazon.com has legitimate pricing advantages, and that's a game of limbo that Best Buy can't win. The reason that I have been bearish on Best Buy over the past couple of years -- and rightfully so -- is that the CDs, DVDs, books, and video games that Best Buy relies on for store traffic are fading product categories.