Poor report comes day after naming of new CEO sends stocks tumbling

NEW YORK -- The news just keeps getting worse at Best Buy each day.

To top off an already eventful several days for the nation's largest consumer electronics retailer, Best Buy Co. withdrew its full-year earnings guidance Tuesday after reporting a 90 percent drop in net income during the second quarter, dragged down by restructuring charges and weak sales.

The poor report comes a day after Best Buy named Hubert Joly, former CEO of the Carlson travel company and turnaround expert, as its new CEO. It was expected that Best Buy would pick someone with retail experience, and Wall Street didn't respond well, sending Best Buy shares down 10 percent.

And before that, the board and Richard Schulze over the weekend waged a public fight over the co-founder and former chairman's plan to take the company private.

Best Buy has been engulfed in mounting controversy since April when former CEO Brian Dunn resigned amid a company investigation into an "improper relationship" with a 29-year-old female employee. Schulze resigned as chairman a month later after the probe found that he knew about the relationship and failed to alert the board or human resources.

The series of bad news comes as Best Buy fights to reverse a decline in its business due to a weak global economy and consumers' changing shopping habits. Customers increasingly use Best Buy to browse for electronics, then buy them cheaper online or elsewhere.

Overall, Best Buy earned $12 million, or 4 cents per share, in the quarter ended Aug. 4. That compares with $128 million, or 34 cents per share, during the same period last year.

Revenue declined nearly 3 percent to $10.55 billion. Adjusted earnings were 20 cents per share, missing the 31 cents per share on revenue of $10.65 billion analysts expected.

Wall Street has been equally unforgiving of Best Buy's timing. Best Buy shares have lost nearly 70 percent of their value since their pre-recession peak of $56.66 in May 2006. On Tuesday, shares of Best Buy fell 1.4 percent, or 25 cents, to close at $17.91, on top of the 10 percent decline on the day before when the CEO announcement.

At the same time, the company is engaged in a public battle with its co-founder. Earlier this month, Schulze, who has a 20 percent stake in the company, made a takeover offer for the chain, offering $24 to $26 per share. Best Buy had said it was considering the offer, which values the company at $8.84 billion.

Best Buy and Schulze went back and forth in public announcements over the weekend.

In a statement issued by Best Buy Sunday, it laid out certain terms for acquisition talks to proceed. Schulze rejected the terms, citing a company requirement that he forgo taking any offer directly to shareholder for 18 months as unacceptable. The time frame had been reduced to January.