Tag

Circuit City

Circuit City + Blockbuster = Circuitbuster?

By business, news, opinion

News has just surfaced in the past couple of days that struggling movie rental company Blockbuster has offered a billion dollars to buy out similarly struggling electronics retailer Circuit City, based here in Richmond.

Blockbuster executives claim it would uniquely position Circuit City, the number two electronics retailer in the United States, to have a more competitive retail concept. How? By pairing electronics and end-user content together, similar to the way the Apple Store does.

But on a personal note, I don’t know how Blockbuster can afford such a deal, seeing how much of a hit they’ve taken in the past few years with rivals such as Netflix undermining their business (although they do have their own service, Blockbuster Online, of which I’m a customer, and it’s better than Netflix if you ask me because you have the option of instant in-store exchange).

In my opinion, bringing these two companies together seems comparable to raising a flag on not just one sinking ship, but two. I’ll be really interested to see what happens if the deal ends up going through.

“Blockbuster Stumbles On Hostile Takeover” – via Business Week

Shares of Blockbuster Inc. plunged to an all-time low Monday after it announced a $1 billion-plus hostile takeover bid for No. 2 electronics retailer Circuit City Inc., earning it a downgrade from a BMO Capital Markets analyst. Shares of the Dallas-based movie rental chain lost 32 cents, or 10.2 percent, to close at $2.81 after falling to a new low of $2.52 earlier in the day. Jeffrey Logsdon said in a note to analysts that he was “uncomfortable” with the deal and said it has the potential to divert management attention and financial resources from its own recovery.

Shares of Blockbuster have lost more than half their value since trading at an annual high of $6.67 a year ago. The company has struggled to compete with online movie operators such as Netflix Inc., and Circuit City management has questioned whether Blockbuster can finance the deal. Logsdon lowered Blockbuster to “Market Perform” from “Outperform” and cut his nine- to 15-month price target to $3 from $5. The analyst said the buyout creates a “two-front war” as the company struggles with its own financial problems. He further criticized the deal, saying it would take nine to 12 months to close and another year after before any financial benefit is realized. Furthermore, Blockbuster will likely have to use equity to pay for the deal, which will further push the stock downward, he said. “We find it difficult to imagine that fighting what amounts to a two-front war will ultimately enhance value for (Blockbuster) shareholders,” Logsdon said.

On Monday, Blockbuster announced that it would go straight to shareholders and pay between $6 and $8 per share in cash for Circuit City after saying the struggling retailer had not responded to repeated offers. The deal values Circuit City between $1.01 billion and $1.35 billion, based on its 168.4 million outstanding shares as of Dec. 31. The offer adds a 25 percent to 67 percent premium on Circuit City shares, based on their $4.79 closing price on Feb. 15, the last trading day before Blockbuster made its offer. Shares of Circuit City, based in Richmond, Va., soared $1.07, or 27.4 percent, to close at $4.97.

Shopping = DEATH!

By Uncategorized

So our family friend from Charlottesville, Sue, stayed with us last night and the night before after coming down for our Christmas party. As you could imagine, there’s not a whole lot of places to shop in Charlottesville. It’s not the boondocks, but there’s a lot more places in Short Pump. So naturally, Sue wanted to do some Christmas shopping while she was down here. Her and my mom were going to go, but I decided to go along too because I really hadn’t bought much of anything for the people I planned on buying for this year.

As a side note, it’s important to realize that guys don’t shop. We hunt, we gather, we buy. If we must enter the doors of a retail building, we are there on a mission and know exactly what we want. We’re not there to leisurely browse through aisle after aisle looking for “cute shoes” or a “trendy top.” Don’t get in our way because we’re making a beeline for the thing we want to purchase and then we’re getting out and going forth with our lives.

Anyway, I could almost feel my soul being sucked right out of my body after hours of this thing they call shopping. I think it’s some kind of natural reaction you hear about from caveman days where your body just shuts itself down as a preventative measure when you are exposed to such preposterous things as “buy one get one free” sales and “blue light specials.”

Where did we go? Well, here’s the complete rundown: Ben Franklin, Grapevine II for lunch, Men’s Wearhouse, CompUSA, Kohl’s, Dollar Tree, Barnes & Noble, Hallmark, H&M, American Eagle, New York & Company, Urban Outfitters, Firebird’s for dinner, Circuit City, and Starbucks.

Yes, I made the best of it and got a good amount of stuff for friends and family, and yes, it was good to see Sue and spend the day with her and my mom, but I was worn out by the end of the day. I do feel good that I actually put some time and thought into my gifts this year and didn’t opt for the typical present of gift cards that I often get.

Is Circuit City Short Circuiting?

By Uncategorized

Circuit City, based here in Richmond, has done something interesting with the store right up the road from its headquarters, at Gaskins and Broad. The big “outlet plug” that used to adorn the front of the store is gone, and the entire store has been remodeled on the inside and out to look more like the newer store in Short Pump. However, it’s not just the look that’s changed. Take a closer look and you’ll notice a new name- “The City.” Although company executives are tight-lipped about it, this location seems to be a concept design of sorts. It’s big and open, and has a layout similar to that of Best Buy. Not surprising, considering how much market share they, their fiercest competitor, has taken from them in the past decade. The company is overhauling many of it’s operations and restructuring their business on the corporate level as well.