The Circuit City mess continues

BestBuy is the most obvious buyer? Aren't most BestBuy's and Circuit City's located next to each other?

There is no way BestBuy can buy Circuit City without being rejected due to Monopoly reason. Where else would you go next?

It's scary to think that pretty soon the only electronics mega store will be Best Buy. I think most people, like myself will continue to shop online and evetually even Best Buy will suffer.

Circuit City waited too long to update thier stores and has terrible upper and middle management.

Thier laptop selection was and still is terrible and thier home audio section is pathetic.

Essentially the electronic selection at Circuit City is barely better than Wal-Mart and Wal-Mart has better prices. Having Verizon as thier only mobile carrier has also been a bad thing for them.

Really a dumb commentary. BBY buyout-absurd for a multitude of reasons. CC Running out of money ? yeah only over a billion in equity left with over a billion in credit line. Blockbuster deal? Under what basis?-the deal was a joke from the word go-Incompetence?-the poster or CC management? Yeah BBY is great because they greet you at the door-we all need some self esteem. Selection- CC is as good as BBY, and Walmart merch is cheap and obsolete(with no service). Sorry former CC sales personnel, electronicshave become a commodity, warranties on depreciating merchandise do not sell anymore. BBY people I am not impressed, and I think your current valuation (stock) is overstated. JMHO- Crappy service, stores needing update are all prevalent in both CC and BBY-the sheer number of stores lends itself to the bad apples in a bushel concept.

Laid off manager was me about a year ago. I worked for CC about four years. When I started with the company it was trading at the middle twenties. When laid off they were trading at around $12 per share. Currently less than $2 I think they regret all their bad business decisions. CC will not sale out to BB, but they will indeed sell-out. They have assets, but with horribly trained management, employees who don't care, and a corporate division which tries to compete with someone larger than them where can they go but down. Here's a waste of money for you, did you know that Circuit City does not purchase any of there stores or the land they lease them. They never update stores so they lose tremendous amounts of money due to this. Best Buy owns all of theirs and picks way better locations hands down. There was talk of selling to a store like Walmart at one point and there being mini electronic stores inside all of them. Could you imagine that....

To Jazzcztj---rofl--CC is no competition to BB BB hast better and more of everything, including locations prices merchandise service etc etc and Geek squad availability.---The only way CC survived this long is by locating close to BB locations----get real

I have several friends who work at cc. From what I am told, mgt has no idea how to manage a biz. The environment is run this way, no run that way. Fundamentally, very few people are coming in the door, simple as that. On busy days, they are doing 20 or 25% sales $$ vs the BB store down the street. And many of those who come in are just price and info shopping, with walmart etc as the next stop. And some of the stores look terrible, I know one which is referred to as the dungeon.

Of course, they canned all their good people in 3 or 4 massive waves of firing. Not to bright unless they thought that they could compete with Walmart, etc.

And they have a plan to get into furniture sales for home theaters. That is a tough business, takes up lots of floor space, and requires 3rd party contractors to deliver the products. It is a totally different business. The one store I was in had no options on what color choices etc the buyer could order. KInd of a take it or leave it deal.

And something else is afoot. I hear of multihour store meetings of all mgt types. It could be that they are going to try the trick of some other companies, and schedule people according to their productivity and, ignoring the people's needs, tell them when they MUST work. All this will do is get the sales force fighting among themselves, in front of the customer, for business. It won't be pretty, and the customers will walk out. It is like having a commission environment where the employees fight for customers, but the commission is negative, eg they will cut your hours, and schedule you at the deadest times of the deadest day if you aren't near the top of their charts. So it becomes a self fulfilling prophecy of destruction for the sales force, and more and more turnover will result. Not a great way to have knowledgeable employees. Nice huh. Maybe their real goal is to drive out a large number of of employees that way, without paying unemployment for them - just another of their purges. While the upper mgt sucks them dry.

And further more, I ran a quick estimate of how many people they need to get rid of in the stores, to become profitable. This was actually done for my business management class at college. The results, I admit with rough numbers, say that if they fired virtually every sales associate, non management / no supervisory employee, they would break even, vs their current $500 million /yr loss run rate. And that assumes that their sales didn't go down, and their gross profit margins on sales stayed the same. Fat chance. Especially when what I hear is that their most loyal customers, how few of them there are, come there for good cust. service vs the oxymoron of 'best buy', and the big box stores with no service.

So, in their present format, they appear to be dead. They are not #2 in the biz. They are number 4 most likely, behind BB, online internet purchases, and all the big box and other stores stealing off their biz. This includes, Sams/Walmart, Target / etc, and even IPOD dispensers I have seen in high end stores like Macy's etc.

And look at the high end products by comparison that the Apple stores sell. You can't find an apple computer in a cc store or on their on line site. Apple is a very successful, come back from the near dead, surprise, and they don't sell their PCs at CC, and their IPOD displays are mostly non-functional fakes - might as well be pictures. The obvious point is that Apple prob. sees CC as degrading the image of Apple as a premium product. How well BB is doing with Apple PCs is unknown.

Their firedog services group is too little too late. Lots of the employees are not certified microsoft employees. There is very large employee turnover. So there is a real problem with people knowing what to tell customers. And the same turnover problem is even worse amongst the sales associates. Some of the mgt actions suggest that mgt wants high turnover.

Fat chance CC can survive in their current format. I have little info on their 'CityStore; mini-stores, except that they expect the employees to cover all products in the store, not just eg TV, or computers. That is going to take more skilled and dedicated employees, yet they seem bent on having another purge.

I've heard that they are doing well with their on-line store. One advantage here that is seen as a brand name that is 'safe to do biz with online' for those who are afraid to buy from unknown distributors with their credit card online. But big business is far more then having just one strength.

It will take billions to rebuild the CC market image and their stores, if they can find a nitch to survive. And they certainly need to replace their upper level , hear no evil, see no evil, dictatorial management. The stock is at $1.70, and various rating services say it is overpriced, one even saying it is worth $0 . And in a low gross margin biz like retailing (they may be making about 18% GM, not sure - before they begin to pay employees, the electric and lease bills, etc.) who is going to invest in them. Especially in a faltering economy?

Next year, in grad school, I expect I'll get to do a project on how their mgt took them from #1, with BB near bankruptcy 10 yrs ago, to the sorry state they are in. Maybe this is a leadin for me to get into forensic accounting, no pun intended.

Good commentary. This has to be the most horribly run company in the US today (or at least in that sector). I too have followed the company for a few years, and there's only two reasons I can come up with to explain CC's current state:

1) Shoonover is in bed with one or more of the board (literally).
2) The Peter Principle has reached critical mass---to the point where management not only has no clue what they are doing, but has no clue as to what they DO NOT KNOW (that is the most dangerous state to be in). I call it "fog of ignorance".

It would make for a good business book I think.