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Best Buy plans stock buyback, dividend hike

June 28, 2007|From the Associated Press

MINNEAPOLIS — Electronics retailer Best Buy Co. moved aggressively Wednesday to support its stock, saying it would immediately start a $5.5-billion buyback program and raise its quarterly dividend by nearly a third.

It also said it was increasing its North American growth plans by 400 stores, bringing its target to 1,800. The Minneapolis-based company would provide no details on when it expected to hit those targets or where the stores would be.

Analysts said the news showed the company had confidence in its future.

Best Buy shares had been trading near the lower end of their 52-week range of $43.51 to $58.49; they rose $1.68, or 3.7%, to $46.67 on Wednesday.

The announcement came a week after Best Buy reported a disappointing first quarter and revised downward its profit forecast for fiscal 2008.

The only negative, BMO Capital Markets analyst Rick Weinhart said, is that Best Buy will no longer have a large cash reserve if the industry or the company's finances falter.

The company said it would raise the regular quarterly dividend by 30% to 13 cents a share. If authorized, the company will pay the dividend Oct. 30 to shareholders of record Oct. 9.

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