Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Jason Stipp | 03-29-2012 03:00 PM

Weighty Decisions

Morningstar markets editor Jeremy Glaser charts the week's decision points for Best Buy, Walgreen, the Supreme Court, and more.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to The Friday Five.

A lot of weighty decisions were made in the market this week: Which ones will make an impact and which will sink? Here with me to offer his insight is Morningstar markets editor, Jeremy Glaser.

Jeremy, thanks for being here.

Jeremy Glaser: Jason, never a tough decision to come down and do The Friday Five.

Stipp: Well, it's always good to see you. And what do you have for The Friday Five this week?

Glaser: Well, this week we're going to take a look at Best Buy, at the Supreme Court, Walgreen, Europe, and finally the first quarter.

Stipp: Best Buy released results this week, and they disappointed investors, but they did say that the firm is going to be making some changes, some pretty big changes. But is it going to be enough to turnaround this struggling retailer?

Glaser: We're going to have to see. Best Buy management is finally making some of those big decisions that they're going to need to really get the company back on track. They've had a string of disappointing quarters, mainly due to increasing competitive pressure. Our analyst R.J. Hottovy has pointed out a number of times, Best Buy has threats from a lot of different areas. is selling music and movies, and electronics online. There is no need to go and walk down to Best Buy or drive down to the Best Buy to get a CD anymore. Walmart is a making a big push into the consumer electronic space; you don't need to make a special trip [to Best Buy] to buy that digital camera, ... and this has really been hurting Best Buy.

So, they're going to try to cut $800 million out in savings in order to try to turn things around, and they're going to close some underperforming big box stores. They're going to open some smaller stores. They're going to focus on mobile phones, which is an area that has been very successful for them, being able to sell mobile phones from a bunch of different carriers all under one roof.

And I think that this is certainly a step in the right direction. I think it's better than just sitting around and waiting for these competitive threats to disappear. They're not. But these moves in and of themselves are not all of a sudden going to make Best Buy return to really the monolithic, incredibly powerful position they had before. It's still going to be challenging for them. It's good to see them moving in this direction, but certainly it's not a done deal that this is just going to save the company.

Stipp: Consumers who were using Best Buy as an Amazon Showroom, however, may be disappointed by some of those store closures, but we'll have to see.

The second one, Jeremy, the highest court in the land is facing some really big decisions as the health-care debates wrap up this week. I'm going to ask you, what's the outcome?

Glaser: Well, I don't know, and I really don't think that anybody including the Supreme Court justices really know right now.  a little cottage industry has popped up over the last week trying to parse every single phrase and every single word that all of the justices used during oral arguments about the constitutionality of the individual mandate in particular, but also some other issues that they're considering, and I think it certainly is going to be a close case. I think, the constitutional issues are not [clear cut]; there is not some big bright line.

Read Full Transcript

{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article