Circuit City Stores, Inc. (NYSE: CC) may have a party interested in finally turning it around. Ultimate Electronics owner Mark Wattles has added to his holdings in the troubled consumer electronics retailer to the tune of 11 million shares. He's been acquiring the shares since late last year and now owns 6.5% of the retailer. Since Best Buy, Inc. (NYSE: BBY) desperately needs a solid competitor, perhaps Wattles is the right person to give it one.Wattles, who built Hollywood Video into a powerful force in the video rental market and an entertainment industry veteran, could be interested in Circuit City since the retailer is primed for an acquisition soon. After announcing disastrous December sales and a plethora of bad news, Circuit City is on the ropes and its CEO may be shown the door soon.
Wattles, who serves as Ultimate Electronics's CEO after taking control in a 2005 bankruptcy auction, has publicly indicated that he wants to expand Ultimate's store count. How better than to take a national chain with plenty of locations and acquire it at a fire sale price? Right now, Circuit City shares are sitting at $4.83, down from its 52-week high of over $22. Is Circuit City being primed for a buyout? If not, it may go further down the tubes soon until it completely re-invents itself.
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Reader Comments (Page 1 of 1)
1-23-2008 @ 2:44PM
Lee D said...
Wattle's aquisition of CC shares, plus his track record and history certainly look like he's planning to take them private. My first thought is that this looks very similar to the situation three years ago when Jerry Zucker bought HBC.
I've been suggesting that CC was an attractive PE move for over a year:
http://businessopinions.blogspot.com/2007/05/follow-up-to-circuit-citys-q1-earnings.html
1-24-2008 @ 11:29AM
Richard White said...
We've made money watching and buying these type of stocks over the years. We look for the stock to head lower until a final decision is made on the sale of the company.
Might purchase at a somewhat lower price?
We don't see this company going under at any stage.
3-13-2008 @ 5:43PM
Jack Bauer said...
Lee D, you have no idea what you are talking about. I worked for Ultimate Electronics when it was still SoundTrack in Colorado and before Wattles sliced Salesperson commissions, increased prices and hired 200 more corporate positions when the corporate office was already overflowed with too many people doing nothing. He's more likely to buy McDonalds then do anything impactful to CC which in my opinion was obsolete 20 years ago.
3-29-2008 @ 11:57AM
James R said...
Perhaps 'Jack Bauer' should be blogging his HMO instead of Ultimate Electronics ... that huge bump on his head needs to heal. As an associate who weathered the failure of Soundtrack through it's emergence under Mark Wattles' guidance, I can proclaim that things have never been better for the customers and employees alike. Far from adding corporate jobs, all upstairs departments were streamlined into a model of corporate efficiency. Sales commissions have never been cut ... merchandising buyers are accountable for increasing product position and managing cash flows ... the guest's perception of a shopping experience is the highest concern. Take a couple aspirins, 'Jack', and sleep it off.