Shares of Best Buy (BBY) are up 52 cents, or 2%, at $23.17, after the company a short while ago said that CEO Brian Dunn has resigned to make way for “new leadership to address the challenges that face the company,” according to a company statement.
Dunn is replaced on an interim basis by Mike Mikan, a director. Best Buy founder Richard Schulze remains as chair.
Best Buy noted, “There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures.”
Update:�S&P Capital IQ’s Ian Gordon this afternoon reiterated a Buy rating on the shares, while cutting his price target to $26 from $31, writing that “With shares at 6.6X our FY 14 forecast, we think the market is overly pessimistic.”
Gordon thinks that “the board of directors and some investors may have lost confidence in the CEO’s ability to execute the strategy” that was announced on March 29th.
Gordon raised his EPS estimate for the fiscal year ending January 2013 to $3.70 from $3.64, after making some refinements to his model.
Update 2: This afternoon, The Wall Street Journal‘s Miguel Bustillo reports that Dunn decided to depart after the company began a “probe into his ‘personal conduct’,” citing a company statement.
Bustillo writes that it’s not clear what was at issue with Dunn’s conduct, but that he made the decision to step down before the probe was concluded.
Bustillo quotes from the company statement:
Certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated.
Best Buy shares closed down $1.33, or 6%, at $21.32, and the stock was up 54 cents, or 2.5%, at $21.86 in late trading.
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