Ever since Circuit City Stores (NYSE: CC) CEO Philip J. Schoonover sliced 3,400 sales people in March 2007 to save money, I have questioned the savvy of its management. That's because many of those fired sales people took their customers over to Best Buy (NYSE: BBY). As its stock lost 86% of its value, I was surprised that anyone would make a bid for it.

Yet Blockbuster (NYSE: BBI), the struggling video store chain, decided to buy. I don't know what got into Blockbuster's head to make it think that combining two struggling companies would make an agile competitor. The Richmond Times reports that it wanted to create a one-stop shop for movies, games, and electronic equipment. But that dream died when Blockbuster pulled its $1.3 billion offer after reviewing Circuit City's books.

Carl Icahn has said he would buy Circuit City. But it's losing money -- $164.8 million, or $1 a share, in its fiscal first quarter. This was $100 million more than its Q1 2007 loss. And Blockbuster's conclusion after a closer look at its financial statements does not bode well for Circuit City's future. Circuit City stock is down 7.8% in pre-market. Let's see whether any new bidders emerge.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Earlier this year, chic and expensive retailer Sharper Image was purchased by a chop shop of sorts. A mall store with $5,000 massage chairs and insanely expensive geek gifts just didn't cut it in an age of high gas prices and home foreclosures. So the company, which went bankrupt, had its brand bought by Hilco Organization and Gordon Brothers Group. And guess what? You may see the Sharper Image brand again at you local Best Buy, Inc. (NYSE: BBY) or Target Corp. (NYSE: TGT) store aisles soon.

The Sharper Image brand may soon be pasted onto vacuum cleaners or sunglasses on retail store shelves. As people tend to buy brands as much as actual products, the brand will probably end up being a good investment on the $49 million that was paid to purchase it after the bankruptcy. It's pretty sad that such negative publicity about a single product -- the Ionic Breeze air purifier -- led to Sharper Image's downfall, although I believe there were deeper problems at play. As in, people loved to look at (but not buy) fancy things with grossly inflated prices.

It appears now that we may yet again see the Sharper Image name on infomercials, web sites and catalogs, as well as on some retail shelves. With an expectation of Sharper Image brand sales hitting an annual pace of $1 billion -- up from 2007's $375 million -- it's pretty easy to see why the owners of the now-defunct brand want to revive it. Customers know the brand, they trust it and they would love to see it on their new vacuum cleaner robot.

Best Buy Inc.'s (NYSE: BBY) Chief Operating Officer made a pretty strong pledge this week. Brian Dunn suggested that the largest consumer electronics retailer in the U.S. would double its sales to $80 billion within five years. This has an eerie air about it, as it sounds much like Dell, Inc. (NASDAQ: DELL) then-CEO Kevin Rollins many years ago. While Dell's ambitious goal didn't really pan out nearly as nice, Best Buy has a much better proposition to get to its goal.

Dunn's announcement at the retailer's annual shareholder's meeting this week was backed up by the fact that Best Buy has already doubled in size from 2003 to 2008. Its sales went from $20 billion to $40 billion in that five-year period. Keep in mind that one of Best Buy's chief competitors, Circuit City Stores, Inc. (NYSE: CC), is basically on the ropes hanging on for dear life. Wal-Mart Stores, Inc. (NYSE: WMT) is Best Buy's largest competitor, but it doesn't carry near the breadth of actual consumer electronic products that Best Buy does. This positioning still leaves Best Buy free to navigate to $80 billion by 2013. But, doubling every five years is no easy task, and especially in the consumer spending environment we're in now.

What is fascinating is that Best Buy apparently controls only about 20% of the consumer electronics market, and about 30% of retail PC sales in the U.S. Combine those low numbers with Best Buy's very aggressive international expansion and partnerships and it's easy to see that $80 billion in annual sales is already being attacked. Will it get there? We'll be checking -- all the way to 2013.

It is safe to say that the past couple of years have been tough on shareholders of Circuit City (NYSE: CC), and today is no different as the company posted a large loss for its fiscal first quarter. Shares of the electronics retailer are down 7.5% after the company posted a loss of $1 a share for its most recent quarter.

The company stated that the main reason for its poor performance last quarter was weak sales performance in the company's established stores. This really should not come as a big surprise to us since we have been well aware of the company's faltering sales over the past couple of years. On the whole, same-store sales dropped by 11.3%, and continues to affirm the belief that Circuit City definitely has its work cut out for it if it ever wants to start regaining its lost market share.

The total loss on the quarter totaled $164.8 million, about triple the $54.6 million loss it recorded for the same period last year. I wish I could say that things are looking brighter down the road but that is just not the case, as the retailer is expected to post another large loss for its second quarter. Analysts had been expecting to see a loss of $143.4 million for the current quarter, but the company issued weaker guidance, stating that it expects to see a loss of somewhere between $170 and $185 million.

The Wall Street Journal reports that Best Buy (NASDAQ: BBY) is test piloting the sale of used video games at its Canadian stores, with an eye toward expanding the program into the United States. While the company says it's too early to say whether the plan will take off, Best Buy's head of international relations said on a conference call that "We're very, very, very hopeful that this will be another avenue of increasing our relationship with the consumer generally."

What a nice way of saying "making more money." The used game business carries substantially better margins than retailing new games, and the frequency of trade-ins reduces inventory costs. Right now the leader in used games is GameStop (NYSE: GME), but you have to think a big push from Best Buy could take some market share in this profitable category. Alternative GameStop's small size and more knowledgeable staff could make it more appealing to consumers than Best Buy -- the two stores have locations in many of the same malls.

Even after its recent price decline, GameStop investors should be taking a hard look at the durability of the company's competitive advantage. The company has so far done exceptionally well competing with big box retailers, a testament to tremendous management and a strong concept. But it's a battle that's likely to continue and, looking further into the future, you have to wonder whether higher-quality digital delivery of games could hurt the company.

Any relief we would have been seen in financial stocks was knocked down by a solid PPI reading and by more worries about banking stocks. We also saw a report from The Federal Reserve reporting that industrial productions fell by -0.2% in May, and plants were running at the lowest capacity in almost three years at 79.4%. As you'd expect, we also saw a decline of -3.3% in new housing starts to an annual rate of 975,000, and that represented more than a 10-year low. These are the unofficial closing bell levels for major US index levels:

• DJIA 12159.65 (-109.43)
• S&P500 1350.90 (-9.24)
• NASDAQ 2457.73 (-17.05)
• 10YR T-NOTE 4.225% (-0.02%)
• 52-WEEK LOWS
• Top 10 Analyst Calls

And the best news of all may be if you believe T. Boone Pickens comment that oil speculators aren't helping the increase in oil prices.

Apple Inc. (NASDAQ: AAPL) shares are trading higher today after Best Buy (NYSE: BBY) reported a first-quarter profit that beat analyst expectations, saying that its expansion of AAPL in-store shops boosted revenue for the quarter. If you think that Apple won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on the stock.

After hitting a one-year low of $111.62 in August, the stock hit a one-year high of $202.96 in December. Apple opened this morning at $178.10. So far today the stock has hit a low of $177.41 and a high of $181.27. As of 12:15, AAPL is trading at $180.50, up $3.66 (2.0%). The chart for AAPL looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $115 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just four months as long as AAPL is above $115 at October expiration. Apple would have to fall by more than 36% before we would start to lose money. Learn more about this type of trade here.

Father's Day is a special occasion for many of us, a day to show our daddies how much we love them. We give dad some extra attention that day and usually also a present that could make him happy. Kiplinger.com has an interesting idea -- one that I really like -- for a Father's Day present you may want to consider: Find a good stock that could bring him a lot of money.

Let's look at some of the companies Kiplinger's Anne Kates Smith believes would be good options this year:

• O'Reilly Automotive (NASDAQ: ORLY) is an auto parts retailer that is facing weak demand as a result of soaring crude oil prices. However, analysts believe the company's strategy to buy CSK Auto will bring a lot of national success. ORLY is expected to show earnings of $1.76 per share this year and $2.02 next year.
• Stanley Works (NYSE: SWK), headquartered in New Britain, Conn., has the advantage of being one of only two companies offering a complete line of hand tools for consumers. The company focuses its performance on both its industrial tool division and a security business. Analysts forecast a profit of $4.18 this year, and $4.63 a share for next year.

I've been known to harp on consumer retailer Best Buy, Inc. (NYSE: BBY) from time to time here. The retailer just gets it in most cases -- from the consumer experience to merchandising decisions to customer service. While fellow retailer Circuit city Stores, Inc. (NYSE: CC) completely doesn't get it and is in horrid shape, Best Buy just keep steaming along, economic recession be damned. Here's a reason why: its store managers are actually encouraged to go "off script" and change merchandising displays on the fly to fit the area where the store is located.

This example about a normal Houston-areas Best Buy location is a perfect example. Houston, being the large port city that it is, was seeing a huge amount of Eastern European shoppers. As a result, it moved iPods and international power converters to the front of the store (from the rear) and saw sales spike on these items -- among other things -- by 67%. In most cases, changing merchandising displays -- called planograms -- are a huge no-no in corporate retailers. The thinking is that the "secret sauce" that works at one store should be simply duplicated at every store. Big-box retailers like Wal-Mart Stores, Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT) follow this strategy religiously.

Expecting store managers to take risks in terms of merchandising decisions is the kind of thing that makes good retailers great. Contrary to what some national retailers preach and practice, the customer needs vary widely from state to state and market to market in most cases throughout the U.S. Why not have a planogram for every unique store that responds better to the surrounding population and give the local consumer the best and most profitable experience? Looks like Best Buy even made the experience personal for shoppers from halfway around the world. That kind of thinking is why the retailer continues to be successful.

Best Buy, Inc. (NYSE: BBY) is rolling out a complete consumer electronics recycling program at 117 of its stores across the U.S. If all goes well and consumers start bringing in old televisions, microwaves and dishwashers, the retailer may expand the program nationwide to all stores. Best Buy states that more than two million tons of electronics are thrown in the trash each year. The small part it could play would make an impact on the amount of electronics that end up in landfills.

That sentiment is all nice and mighty, but don't think for a second there won't be an incentive to purchase that replacement piece of electronics right there on the spot as you're unloading your old console television. Best Buy has a knack for neat programs that have the end goal of driving more foot traffic into its stores, and this one is no different. This time, though, the benefits right up front equal less electronics contamination in landfills.

When many consumer electronics recycled products are shipped overseas to be "demanufactured" in unsafe conditions (then dumped into local landfills), Best Buy's effort to have its recycling partners actually recycle all the parts possible from all the products received in is admirable. If the retailer really wants to make an impact, give the customer 10% off a new piece of equipment for recycling that old microwave, then really watch the customers line up.

Best Buy (NYSE: BBY) is scheduled to report Q1 EPS on June 17.

Deutsche Bank has a Buy rating on BBY.

BBY June 45 straddle is priced at $3.60, July 45 straddle is priced at $4.95. BBY June option implied volatility of 43 is above its 26-week average of 38 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Consumer electronics retailer Best Buy, Inc. (NYSE: BBY) didn't really like the FCC's idea that it label all analog TV sets with a warning label -- something I posted on a month ago. In fact, the retailer is now challenging the FCC's authority to require retailers to slap those "Warning: Analog TV" stickers on those retail shelf boxes.

The FCC seems to believe it will be Y2K all over again when the analog television frequencies are vacated next February for all those who receive TV signals via antenna. Standard issue for the federal government, I suppose. Best Buy not only doesn't want to have even more labels and customer communication littering up its stores, but it argues that the fines levied by the FCC for the non-use of these stickers are invalid as well.

Best Buy was fined $280,000 and Wal-Mart Stores, Inc. (NYSE: WMT) was fined $992,000 for failing to include these analog TV stickers on the appropriate products. Wal-Mart had not decided what its plans were yet, but my guess if that it will unite with Best Buy to present a huge challenge to the FCC's authority. Best Buy's biggest argument was that retailers are not commission licensees by the FCC --- so how can the FCC impose fines? There are quite a few more arguments being made by Best Buy that should hold up in a court of law easily if it gets to that.

One would think that the recent FCC auctions of the about-to-be-abandoned analog TV airwaves would give enough cash back to the FCC's coffers than stupid fines like this. Apparently not.

Best Buy, Inc. (NYSE: BBY) has gone shopping across the pond, and will be spending about $2.1 billion in cash to purchase 50% of the UK's Carphone Warehouse mobile telephone retailer. Best Buy is signaling to the retailer world that it thinks mobile is the place to be, after it committed to expanding mobile market share here in the U.S. just recently in a large way.

This multi-billion commitment to Carphone Warehouse will allow the European retailer to pay down debt and gets Best Buy a foothold in the European retail business in a pretty large and immediate way. Along with Wal-Mart Stores, Inc. (NYSE: WMT), U.S. retailers are seeking out ways to expand their footprints globally. Carphone Warehouse isn't just a small step in that direction, as it's one of Europe's largest mobile phone retailers.

Best Buy's revenues continue to soar on an annual basis, and this partnership should add to that amount significantly. While U.S. competitor Circuit City Stores, Inc. (NYSE: CC) has had nothing but troubles recently and is just hanging out in la-la land while delivering substandard results every quarter, Best Buy is going for the jugular -- still growing sales and taking market share in the U.S. and now in Europe. Can it be stopped? For now, there's no equal -- so, no.

Best Buy Co., Inc.'s (NYSE: BBY) Geek Squad technical support services have been very successful for the largest consumer electronics retailer in the U.S. in recent years. It's a profit-making machine that's put the emphasis on service margins over ever-shrinking product margins. Anything and everything PC-related that you need done -- personal or business -- the Geek Squad can be there.

Technical support is the best way to describe much of what Best Buy's Geek Squad does -- so would you believe the retailer wants to get involved with technical support in a social networking sense? FixYa.com, a website that allows customers to help each other with technical issues and owner's manuals from almost any piece of technology, is generated by users -- not retailers. However, as many of us have seen, user-generated destinations can be some of the most successful. Why pay to support your customers when they can support themselves in a sense?

I don't believe this is any kind of cost-saving move by Best Buy -- the retailer simply wants to provide its customers with an additional way to receive support as fast and efficient as possible before handling in-depth issues directly to a Geek Squad representative. Best Buy's co-branded version of the site located here will allow customers an easy entry path into support and troubleshooting. Again, it looks like Best Buy is outpacing competitors in terms of getting help to its customers as fast as it can, and in this case, at no charge.