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We maintain our bearish stance on Best Buy Company Inc. (BBY - Analyst Report), the beleaguered consumer electronic retailer, with a price target of $10.00, following its dismal third-quarter 2013 results.

Best Buy posted weaker-than-expected results. The quarterly earnings came in at 3 cents per share, plummeting 94% from 47 cents earned in the year-ago quarter, and missing the Zacks Consensus Estimate of 12 cents by miles.

Thus, this slide in earnings challenges Hubert Joly, the newly appointed Chief Executive Officer, with the Herculean task of completely revamping the operations. Best Buy, had announced the suspension of its future share buyback program in the second quarter and refrained from providing earnings projection for fiscal 2013 due to the uncertain economic environment related to product launches and industry wide sales.

Best Buy’s total revenue dropped 3.5% year over year to $10,753 million but came ahead of the Zacks Consensus Estimate of $10,730 million. Comparable-store sales fell 4.3% compared with a decline of 0.7% in the year-ago period. The company has long been struggling with dwindling sales in key categories including televisions, notebooks, digital imaging and gaming devices, which in turn, is taking a toll on the company's same-store sales results.

Moreover, heightened competition from online retailers like Amazon.com Inc. (AMZN - Analyst Report), is adversely affecting its sales and profitability as the online retailers are gradually encompassing new merchandise categories under their purview and offering huge discounts on products with free shipping services to attract customers.

We also remained concerned about the tough economic environment in China and weak sales in Canada. Further, Best Buy’s cash position plunged 85.1% year over year to $309 million at the end of the third quarter, which is of grave concern.

The Zacks Consensus Estimates have been declining since Best Buy reported disappointing results. For fiscal 2013 and 2014, the Zacks Consensus Estimates has fallen 11 cents and 3 cents to $2.70 and $2.65, respectively in the last 7 days.

The above analysis supports our unbiased view, and advocates our “Underperform” recommendation on the stock. Best Buy, which faces competition from Wal-Mart Stores Inc. (WMT - Analyst Report), holds a Zacks #5 Rank (short-term Strong Sell).

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