What’s different this time around?
Microsoft will be opening up shop in Best Buy Co., Inc. (NYSE:BBY). You read right, apparently Microsoft will be rolling out 600 new Microsoft stores within Best Buy in order to bring broader brand appeal. The whole computer department will instead be replaced with Microsoft stores that look reminiscent of an Apple store. Best Buy currently has 1,100 stores, meaning that half of them are being converted to contain Microsoft stores. As a result, it is likely that Best Buy will be able to see a significant improvement in its net income. The company’s comparable-store sales declined by 1.1% when compared to its 3.7% decline in its previous year. A partnership with Microsoft could eventually generate a year-over-year improvement in comparable-store sales.
The way it looks, both Nokia Corporation (ADR) (NYSE:NOK) and Best Buy will benefit from the partnership with Microsoft. Just recently, the ad geniuses at Microsoft (not Nokia) put together an amazing advertisement that more or less captured the dog fight between the smart phone vendors. Microsoft is providing 600 stores for distribution, just to make sure Nokia phones running Windows Phone 8 are able to get the distribution they need to stay in the smart phone race. Let’s also not forget that 5% of teenagers are planning to make the switch over to Windows Phone, implying that Nokia will be able to get a boost in sales going forward.
Best Buy may be able to turn around its operations through the partnership with Microsoft. I see better utilization of resources with Microsoft selling the product on the floor because it has more incentive to do so. Best Buy is becoming more and more like a technology mall; with Geek Squad in one corner and the Samsung store in another section, the company may have found an effective way to turn around both earnings and sales growth going forward.
Conclusion
Don’t count out Nokia Corporation (ADR) (NYSE:NOK) yet. While I am not completely sold on the Nokia EOS product, I do believe that the company has a decent shot at turning itself around. The company’s product distribution is backed by Microsoft, and if it were to make a significant improvement in product specifications then there could be a very real opportunity to take some serious market share away on a global scale.
Best Buy may eventually turn around its operations with a technology mall concept. Almost every major technology company needs a front-facing sales force to remain competitive these days, and Best Buy can provide that.
The article Nokia: The Turnaround of the Century originally appeared on Fool.com and is written by Alexander Cho.
Alexander Cho has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Alexander is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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