Best Buy Reports Record Revenue Growth

Best Buy Reports Record Revenue Growth

Best Buy Company, Inc. reported revenue for December increasing by 13% to $8.5 billion this week. The company attributed the revenue growth to an 8.2% increase in store sales and the addition of new stores in the past 12 months.

"Our ability to out-perform the market is due entirely to the hard work of our employees around the world, and it's very gratifying that our focus on the customer is producing such great results," said Brian Dunn, CEO of Best Buy. Dunn noted that the holiday season was especially critical as this year the stakes were "higher than ever" with the rough economy.

Best Buy benefited from not only a 9.3% gain in store sales over the holidays, but also growth in Internet sales. Best Buy's online revenue increased 34% versus the prior year, driven primarily by increased traffic on its consumer website.

Televisions, notebook computers, digital imaging and mobile phones proved to be the most popular holiday gifts this year. Best Buy believes that its stronghold in sales of these technologies helped it gain market share in the month of December. The company anticipates continued revenue growth in line with its annual guidance.

Best Buy (BBY) ended the week up at $39.91.

UPS Reports Higher Earnings and Reduced Workforce

United Parcel Service ("UPS") reported fourth-quarter earnings exceeding its prior guidance this week. The company announced that it anticipates earnings in the range of $0.73 to $0.75 per share. UPS previously projected earnings of $0.58 to $0.65 per share for this period.

"The stronger earnings stem from better-than-expected results in both domestic and international operations and savings through cost management," said Kurt Kuehn, UPS's Chief Financial Officer. "However, we still anticipate a gradual economic recovery with improvement more evident as 2010 progresses."

In an effort to improve performance, UPS also announced it is streamlining its domestic management structure. Effective in April, UPS will reduce its U.S. Regions from five to three and its U.S. Districts from 46 to 20. Analysts noted that the restructuring will eliminate approximately 1,800 UPS positions across the country. UPS said that while there will be some job displacement, employees will be offered voluntary separation packages and may qualify for severance benefits.

"The decision to reduce our workforce is difficult and we appreciate the significant contributions of those who will be affected by this change," said Scott Davis, UPS Chairman and CEO. "But we believe this will allow us to sharpen our focus on profitable growth while being even more nimble in serving our customers."

UPS (UPS) ended the week down at $60.15.

Google Launches Nexus One

Google launched sales of the Nexus One mobile phone this week through its new web store. The Nexus One, which is expected to compete with Apple's iPhone, has been heralded as a next-generation "superphone" based on Android software technology.

Market analysts point out that consumers can buy the Nexus One without a service contract, meaning any GSM network SIM card can be inserted into the device. Google says that consumers will benefit from the ability to match a phone of their choice with the service plan that best meets their needs.

"The Nexus One belongs in the emerging class of devices which we call 'superphones,' with the 1GHz Qualcomm Snapdragon chipset making it as powerful as your laptop computer of three to four years ago. It's our way to raise the bar on what's possible when it comes to creating the best mobile experience for consumers," said Andy Rubin, Vice President of Engineering at Google.

Nexus One's hardware features a five megapixel camera and expandable memory card. Applications include Google Maps Navigation, Phone Book, Quick Contacts, Facebook and Android Market which gives users access to more than 18,000 applications. Nexus One is initially available from the Google web store without service for $529 or starting at $179 with a two-year contract from T-Mobile USA.

Google (GOOG) ended the week down at $601.93.

The Dow started the week at 10,428 and ended at 10,618. The S&P 500 started the week at 1,115 and ended at 1,145. The NASDAQ started the week at 2,269 and finished at 2,317.

Shorter Maturity Notes Rise on Job Losses

Shorter Maturity Notes Rise on Job Losses

Two-year Treasuries rose this week following an unexpected decline in U.S. employment reported by the U.S. Labor Department's Bureau of Labor Statistics. Two-year notes gained the most in three weeks with yields falling as investors acted on the knowledge that the employment market is still far from recovery.

The Labor Department reported an 85,000 decline in nonfarm payroll employment for the month of December. Employment fell in construction, manufacturing, and wholesale trade, while the temporary help services and health care sectors added jobs.

In December, both the number of unemployed persons, at 15.3 million, and the unemployment rate, at 10.0%, remained unchanged. At the start of the recession in December 2007, the number of unemployed persons was 7.7 million, and the unemployment rate was 5.0%.

Market analysts anticipated an improvement in employment, with the slight decline in the unemployment rate and other data suggesting that the economy is on the road to recovery. Job growth continues to be the lagging indicator as the economy moves out of recession.

The 10-year Treasury note yield began at 3.83% and ended at 3.81%. The 30-year Treasury note yield began at 4.63% and finished at 4.70%.

Rates Slightly Lower in the New Year

Rates Slightly Lower in the New Year

Freddie Mac reported mortgage rates slightly lower in the new year. The 30-year fixed-rate mortgage (FRM) averaged 5.09%, down from last week when it averaged 5.14%. Last year at this time, the 30-year FRM averaged 5.01%.

The 15-year FRM this week averaged 4.50%, down from last week when it averaged 4.54%. One year ago at this time, the 15-year FRM averaged 4.62%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.44%, unchanged from last week when it averaged 4.44%. One year ago, the 5-year ARM averaged 5.49%.

"Mortgage rates eased slightly this week after rising consecutively through December," said Frank Nothaft, Freddie Mac Vice President and Chief Economist. "Current interest rates for fixed-rate mortgages are just about at their annual average for 2009, while ARM rates are considerably below their averages for last year."

There is expectation that the Federal Reserve ("Fed") will raise the federal funds rate once the economy improves. Nothaft says that if the Fed raises rates, ARM rates will follow suit because they are typically tied to shorter-term interest rates. However, he cautioned that the federal funds futures market does not anticipate any Fed action until the second half of 2010.

The money market fund finished this week at 0.95%. The 1-year CD finished at 1.46%.

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