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Don't know why they didn't settle, but + $140M in revenues - $22 million in favor of TechForward - $5 million in punitive damages - X millio

Don't know why they didn't settle, but + $140M in revenues - $22 million in favor of TechForward - $5 million in punitive damages - X million in lawyers fees Best Buy still did alright if you ask me.

tptacek 14y ago
Best Buy's gross margins hover around 25%, and that's before all the rest of their overhead kicks in. Best Buy probably took a bath here.
- ww520 14y ago
  Is their gross margin just revenue - whole_sale_cost? If that's the case, they also have cost in labor, real estate, marketing, and others. After all those, the lawsuit would have put them in red.
- a5seo 14y ago
  Good. Screw them. Now the evil a-hole caption will hang over their logo in my mind forever. Probably others on HN. Even if this damages their brand in only a small way, it's a real cost.
  - tptacek 14y ago
    If you really want to screw Best Buy the way the rest of the market is screwing them (that is: to death), then, next time you want to buy a big-ticket electronic product, go to Best Buy to try it out. Then buy it on Amazon like everyone else does.
    - tripzilch 14y ago
      I agree this is the best way to buy electronics :) (except over here it's a different large electronics chain and smaller online retailers instead of Amazon) For an extra slap in the face, a friend of mine even used one of their on-display Macs to place the order in that very store :) (while he did take some precautions against keyloggers, I'd be a bit more hesitant myself, to enter such data into a public computer). Their problem is that smart customers need to go online anyway, because the specs on the cards in the store are always incomplete (or even incorrect) so you can never quite compare two items. (and then it turns out that their cheapest model runs at nearly the same wattage as their expensive "energy saver" model ...) (that was for monitors btw)
wpietri 14y ago
Revenues aren't profits. Over the last 4 years their pre-tax profit on revenues was 3.6%. Even assuming this was much more lucrative than average, I suspect they lost money. The real cost doesn't come in the suit, though. It comes in lost opportunities and increased deal-making costs because potential partners are much less likely to trust them now.
- icambron 14y ago
  I agree. Also, the 140 that BB would have made wouldn't have all gone to Techforward anyway, whether it was profit or not. What we'd really have to compare is the 22 million + fees to how much they would have paid Techforward as part of the partnership. Since there are a lot of other costs to a buyback program (e.g. actually buying things back from customers), 22 doesn't sound unreasonable. This was a huge, shortsighted waste on BB's part.
- unreal37 14y ago
  This program, the buyback program they got sued over, was almost all "pure profit". Kinda like the extended warranty they try to sell you. It's 300% profit margin business. The court documents talk about it Best Buy expecting it to be a cash machine and driving instant profits to the Best Buy bottom line, and that TechForward would have made about $20MM per year just from the licensing deal. Best Buy still made "tons of cash" from this. The punitive damages of only $5MM are a shame. This was wilful theft of IP.
icebraining 14y ago
They would've made that revenue anyway if they had kept the deal with TechForward.

Don't know why they didn't settle, but + $140M in revenues - $22 million in favor of TechForward - $5 million in punitive damages - X million in lawyers fees Best Buy still did alright if you ask me.

tptacek 14y ago

Best Buy's gross margins hover around 25%, and that's before all the rest of their overhead kicks in. Best Buy probably took a bath here.

ww520 14y ago
Is their gross margin just revenue - whole_sale_cost? If that's the case, they also have cost in labor, real estate, marketing, and others. After all those, the lawsuit would have put them in red.
a5seo 14y ago
Good. Screw them. Now the evil a-hole caption will hang over their logo in my mind forever. Probably others on HN. Even if this damages their brand in only a small way, it's a real cost.
- tptacek 14y ago
  If you really want to screw Best Buy the way the rest of the market is screwing them (that is: to death), then, next time you want to buy a big-ticket electronic product, go to Best Buy to try it out. Then buy it on Amazon like everyone else does.
  - tripzilch 14y ago
    I agree this is the best way to buy electronics :) (except over here it's a different large electronics chain and smaller online retailers instead of Amazon) For an extra slap in the face, a friend of mine even used one of their on-display Macs to place the order in that very store :) (while he did take some precautions against keyloggers, I'd be a bit more hesitant myself, to enter such data into a public computer). Their problem is that smart customers need to go online anyway, because the specs on the cards in the store are always incomplete (or even incorrect) so you can never quite compare two items. (and then it turns out that their cheapest model runs at nearly the same wattage as their expensive "energy saver" model ...) (that was for monitors btw)

wpietri 14y ago

Revenues aren't profits. Over the last 4 years their pre-tax profit on revenues was 3.6%. Even assuming this was much more lucrative than average, I suspect they lost money. The real cost doesn't come in the suit, though. It comes in lost opportunities and increased deal-making costs because potential partners are much less likely to trust them now.

icambron 14y ago
I agree. Also, the 140 that BB would have made wouldn't have all gone to Techforward anyway, whether it was profit or not. What we'd really have to compare is the 22 million + fees to how much they would have paid Techforward as part of the partnership. Since there are a lot of other costs to a buyback program (e.g. actually buying things back from customers), 22 doesn't sound unreasonable. This was a huge, shortsighted waste on BB's part.
unreal37 14y ago
This program, the buyback program they got sued over, was almost all "pure profit". Kinda like the extended warranty they try to sell you. It's 300% profit margin business. The court documents talk about it Best Buy expecting it to be a cash machine and driving instant profits to the Best Buy bottom line, and that TechForward would have made about $20MM per year just from the licensing deal. Best Buy still made "tons of cash" from this. The punitive damages of only $5MM are a shame. This was wilful theft of IP.

icebraining 14y ago

They would've made that revenue anyway if they had kept the deal with TechForward.