CARPHONE took the rough with the smooth yesterday, cashing in on one success while taking the failure of another on the chin. The US sale crystallises value for Carphone shareholders – who are in for a payday – but the deal is not spectacular in and of itself. Best Buy has factored in an expected slowdown in smartphones in the US next year, meaning Carphone has missed out on a premium on the sale.
Shuttering the heavy loss-making Big Box white goods stores in the UK is sensible – strip them out and Carphone’s earnings before interest and tax (Ebit) are £65m.
Demand for white goods and flat-screen TVs – both staples of the out-of-town stores – show no sign of picking up in the new year, while smartphones remain high growth in the UK.
Rolling out the Best Buy Mobile formula to emerging markets is a smart move. The US business was the only growth division for Carphone, with Ebit hitting £45m. However, duplicating the success in the wildly different Chinese, Indian and Latin American markets will be no mean feat.
Chief executive Roger Taylor called it a low risk move, which will, in theory at least, limit expenditure on the venture. One to watch.