Can Yahoo, Best Buy and Sony survive?
Image courtesy of Flickr user IvanWalsh.com
(MoneyWatch) COMMENTARY A guy walks into a Best Buy store, finds a Sony Vaio notebook on display and pokes around Yahoo Finance for a bit.
© 2012 CBS Interactive Inc.. All Rights Reserved. Question: What will the guy do next?
A: Go home, Google "Sony Vaio," buy it online for $200 less.
B: Go to an Apple store, buy a MacBook Air for $200 more.
C: Go home; buy shares of Apple, Google and Amazon; short Sony, Yahoo and Best Buy.
D: Nobody cares.
Watching Sony (SNE), Yahoo (YHOO) and Best Buy (BBY) struggle for survival these days is like watching three different train wrecks in agonizing slow motion, all at the same time. You look at one, exclaim, "What a horrific tragedy," then look at another and cry, "OMG, that's even worse," and so on.
Tuesday was just like that. There was news on all three fronts and it sure wasn't pretty.
Dunn is out -- and he's the lucky one
The latest on Best Buy CEO Brian Dunn's sudden resignation is that the board of directors was probing his "personal conduct," and Dunn decided he'd rather not stick around for the conclusion of the investigation.
I don't really follow retail much, but I did have one interaction with Dunn last year and he struck me as a pretty standup guy. Still, I don't think a former store manager is what Best Buy needs at the helm, right now. The company needs to figure out how to survive in an Amazon (AMZN) world without turning into Radio Shack (RSH). That spells "outsider," if you ask me.
File this one under "blessing in disguise."
Restructuring is not a strategy
After laying off 2,000 people last week, Yahoo CEO Scott Thompson finally rolled out the much-anticipated restructuring he reportedly worked out with Boston Consulting Group and without much of his senior management team. Kara Swisher at All Things D correctly called this bizarre attempt at a turnaround: Aim. Fire. Ready. No kidding.
The more disturbing thing about it is that Thompson still hasn't articulated a credible strategy for somehow reigniting the company's growth or even slowing down its demise in a world increasingly dominated by the likes of Google (GOOG) and Facebook. As I said last week, restructuring an organization is not a strategy. But then it's hard to be disappointed when you expect so little from a company. Really.
Cleaning up Stringer's mess
And that leads us to Sony, which now expects to lose a record $6.4 billion this past fiscal year. And that's just the latest in a long string of losing years. New CEO Kazuo Hirai now has the unenviable task of trying to figure out how to clean up the giant mess left by his predecessor, Howard Stringer.
Ironically, Stringer wasn't even the guy who turned this once-great company into a tragic disaster. That distinction belongs to none other than Stringer's former boss, Nobuyuki Idei. It was Idei's bright idea to turn Sony into a global entertainment giant by expanding aggressively into media content.
That resulted in a schizophrenic nightmare, a company that needed to focus on either consumer electronics or entertainment but couldn't possibly survive doing both. The synergies are simply not there, strategically or operationally. They never have been.
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Until Sony has a leader with the guts to make that tough decision, well, all I can say is I hope it continues to turn out great movies because it's more or less done in the consumer electronics business.
Who cares?
So why write about has-been companies? Because they're all once-great brands that still have a chance if their leaders would get their heads out of their you-know-whats, make some smart decisions, and earn their exorbitant pay, for a change.
You know, last year I had an email dialog with Dunn. I told him that I was going to write about an experience I had at a Best Buy store and offered him a chance to respond. To his credit, he did, but one of the things he said applies very much today. He said he found the situation I described to be "disturbing" and apologized.
Wouldn't it be something if the leaders of these three companies actually said that to their shareholders and employees on a conference call instead of all the usual corporate spin? Don't hold your breath.
Image courtesy of Flickr user IvanWalsh.com
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They had the people and market skills of a "box dropper" - in that media folks were supposed to look at their product are go "wow" but they don't.
Likewise the consumer electronics they adopted all the paranoia and protectionism we've come to expect from big media (with locked in systems and non-existant or even confrontation after sales support) and people were just supposed to be happy consuming only the consumer electronics that Sony supplied, but the electronics a bunch of constantly evolve standards and devices - not a shoot and sell movie.
I was really excited when Best Buy opened in our area, that is until I went into the store. I've bought a few things there, things that I needed and happened to be in town so went ahead and picked up. I don't get to town often, sometimes not even once a week, and when I do I don't have a lot of time to go to different stores.
The first place Best Buy fails is with their prices. Here Costco is right across the street and although their electronics department is tiny in comparison, they often have much better prices. The employees at Best Buy sound like they're halfway knowledgeable but I learned the hard way not to trust them. The ones I've talked with are super nice people but they don't seem to know much. Shoot, WalMart often has better selection and prices in their little electronics department than Best Buy does.
If a person needs something in the way of electronics they've got to spend hours just doing research to make sure they get the right thing and it isn't going to explode within three months. All that research has to be done at home. I do most of mine on sites like NewEgg and Amazon via customer reviews. You can bet after all those hours of researching I'm not getting in the car to drive thirty or more miles and spend six hours trying to find that exact thing in town then more often than not walk away empty-handed because either they didn't have it or it cost considerably more than online. I'm going to order it off the internet. I know my situation is different from people who live in or near a city but most things I order off the internet will be at my door well before I can get into town again.
What really stinks if these companies go under is all the people who will lose their jobs in the process.
I'm not going to sit here and explain all of the ways in which Best Buy doesn't get it, but they'll easily go the way of Circuit City if they don't understand that retail stores are not the future of the company.