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Best Buy Sets $5 Billion Share Buyback, 7% Dividend Boost

Best Buy Sets $5 Billion Share Buyback
Pedestrians pass in front of a Best Buy Co. store in New York. Photographer: Chris Goodney/Bloomberg

Best Buy Co., the world’s largest consumer electronics retailer, approved a new $5 billion share repurchase plan and raised its quarterly dividend by 7 percent after last quarter’s earnings exceeded analysts’ forecasts.

The buyback plan replaces the $5.5 billion program announced in 2007, which had $800 million left as of May 28, the Richfield, Minnesota-based company said today in a statement. The payout will be increased to 16 cents a share.

Increasing demand for mobile phones and tablets countered declining revenue from televisions in the quarter ended May 28. As competition intensified from Inc. and Wal-Mart Stores Inc., Chief Executive Officer Brian Dunn added touch-screen kiosks to let customers shop on and retrained employees to push sales of gadgets that work together.

“It’s a very efficient use of their money,” Anthony Chukumba, an analyst at BB&T Capital Markets in New York, said of the buyback and raised dividend. Best Buy is shrinking spending on stores to focus on smaller units and online sales, and “they clearly have the wherewithal to invest in what’s working and return the value to shareholders.”

Chukumba recommends buying the shares.

The stock jumped 84 cents, or 2.7 percent, to $32.38 at 4:15 p.m. in New York Stock Exchange composite trading. Best Buy has fallen 13 percent in the past 12 months.

Profit has declined in the past three quarters as Best Buy coped with competition from online sellers and discounters, and consumers’ outlook on the economy darkened.

Bloomberg’s gauge of economic expectations fell this month to the lowest level since March 2009 after unemployment hit a 2011 high of 9.1 percent in May.

Best Buy announced the measures as it prepared to host its annual meeting at its headquarters today. The retailer last raised its quarterly dividend, from 14 cents to 15 cents, in 2010.

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