As Brian White posted this morning, Circuit City Stores (NYSE: CC) reported a big loss -- and even more ominously it withdrew its guidance. This brought back memories of what many publicly-traded high tech companies said after the dot-com crash -- they had no "visibility."

Why is Circuit City in trouble? I see three broad trends which threaten its bottom line and its ability to foresee when it will recover:

• Consumer electronics is a complementary good -- that is, the purchase of consumer electronics typically accompanies a larger purchase. Specifically, when people buy new houses, they also tend to buy new flat screen TVs. So when the housing market is expanding, so do purchases of consumer electronics to fill up the family rooms and kids' rooms of those newly purchased homes. Thus it should come as no surprise that when the housing market collapses, the sales of those complementary goods should follow suit.
• Competition in consumer electronics is intense. The popularity of consumer electronics products -- such as the flat screen TVs -- has attracted new entrants which compete by slashing prices. Thus what had been a growing and profitable line of business has become one with shrinking revenues and narrowing margins.
• Circuit City is poorly managed. Circuit City is not a particularly well-managed company. While cost cutting is a natural response to reduced product margins, the way Circuit City cut costs was not that bright. As I've posted, by getting rid of 3,400 of its top paid sales people, Circuit City also caused its customers to follow the sales people to their new employers. And many of those sales people decamped to Best Buy Co., Inc. (NYSE: BBY). So Circuit City's cost reduction strategy has indeed reduced its costs but it may have reduced its revenues by even more.

I hate to say this, but with the ongoing collapse of the housing market, it could be five to eight years before enough new people start to buy a sufficient number of new houses to spur demand for Circuit City's consumer electronics. This makes me think that Circuit City is a stock I'd avoid for quite some time -- unless a private equity firm decides to take it out.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Best Buy or Circuit City.