Circuit City Stores, Inc. (NYSE: CC) is sitting on the brink of a buyout. The question is who, and how much. The deal with Blockbuster Inc. (NYSE: BBI) is still very possible, but investor Mark Wattles of Wattles Capital Management has said to expect a deal within four weeks regardless. With Circuit City shares nearly the bottom -- closing yesterday at $4.35 -- some entity needs to swoop in and just offer cash for the company. As in, now.

It's a foregone conclusion that Circuit City can't compete with other national consumer electronics retailers. The access to its prime real estate locations would be a main reason for the chain to be bought up at such a fire sale price. Wattles said Blockbuster and two unnamed private equity firms are most likely the three finalists ready to step up and purchase Circuit City.

While all this "due diligence" is going on for buying a retailer at such a low price, shareholders are getting antsy with good reason. It's hard to imagine any shareholder making out on Circuit City stock -- including Wattles who stands to lose a good chunk of change unless the shares rebound. Circuit City's largest investor, HBK Investments (a 9% stake), probably needs to have a deal done as soon as possible with a sweet premium to the current share price. Who could blame them?

Regardless of who buys Circuit City, this is a company that needs to return shareholder equity back to its shareholders and just fold up and go away. It's not going to get any better.

When Blockbuster Inc. (NYSE: BBI) announced at the start of this week that it would offer over $1 billion for struggling consumer electronics retailer Circuit City Stores, Inc. (NYSE: CC), there were probably quite a few people who were left scratching their heads. Why would two companies in a downward spiral want to combine? Well, to try and save both companies if possible. Other theories have been put forth ad nauseum, but if the takeover does go through, the first order of business should be to toss platitude-spouting Circuit City CEO Phil Schoonover.

Lured from larger competitor Best Buy, Inc. (NYSE: BBY) back in 2004, Schoonover's experience with the largest consumer electronics retailer in the U.S. was seen as helping Circuit City. It hasn't worked out, though: Circuit City has not gained a single inch against Best Buy and it has slowly traveled the road to mediocre and now deplorable performance. Why most of Circuit City's management team exists is beyond me, even with Schoonover trumpeting the "turnarounds" and "we have plans in place" phrases he doles out at every quarterly conference call.

It's too bad -- Circuit City could have been a formidable competitor to Best Buy, but was outmaneuvered at every possible turn by a more nimble (but much larger) competitor. Wattles Capital Management, which at one time was rumored to be looking at a takeover of Circuit City, has wanted the current Circuit City board tossed out for quite some time. Mark Wattles, the owner of Wattles Capital Management, said in a letter to the company's board, "We are confident that the right senior management team with the right strategy and focus would be able to immediately and dramatically improve Circuit City's profitability." Regardless of where Circuit City is headed, one thing is certain: Schoonover and his cronies should dust off their resumes -- not that they are very impressive.

Circuit City Stores, Inc. (NYSE: CC) has been under the gun for several quarters now as it lost market share to larger competitor Best Buy, Inc. (NYSE: BBY). Even the holiday shopping month of December was not kind to Circuit City, which stated that its same-store sales fell 11% [subscription required] during last month across its entire company, with a 12% drop in U.S. same-store sales. That is one huge ouch.

I am amazed that Circuit City has not done anything in at least the last two quarters beyond the "transformational work" CEO Phil Schoonover keeps mumbling about every time the microphone appears in front of him.

Somehow, he has been able to keep his job as things has gone from bad to worse to abysmal in the company he leads. 2008, if sanity returns, will see him jettisoned from Circuit City in favor of someone who knows what he or she is doing.

Circuit City's December sales decreased 8.9% to $1.92 billion. At the same time, international same-store sales went up to the tune of 6.5%. Circuit City has affirmed that it will have a "modest" loss in the Q4 period based on losses from its U.S. operations. Those U.S. operations just can't jump from the funk they are in, and in 2008 I don't see anything changing except the name on the corner office.

Circuit City shares are down to $3.95, or 6.18% in early trading.

When Best Buy (NYSE: BBY) blew through analyst estimates earlier this week and made a larger-than-expected profit, many industry watchers probably wondered what Best Buy is doing right that fellow retailer Circuit City (NYSE: CC) is doing wrong. Now we know: Circuit City saw sales plummeted 3.1% as Peter reported this morning in another quarterly loss as it continued losing market share to its much larger rival.

Best Buy is probably not only taking market share away from Wal-Mart -- the world's largest retailer -- but it's stomping Circuit City into the ground as well. Circuit City CEO Phil Schoonover said his company's poor performance in its most recent quarter was due to the fact management "underestimated the financial impact from the disruption of our transformation work." What else is the company transforming? From a slightly-bad retailer to a completely inept one?

I'm not so sure how Schoonover has kept his job with three consecutive quarterly disappointments, but perhaps 2008 will see a brighter future for the retailer. Best Buy has its success formula pretty much down perfect, and the immense challenge Circuit City will face should be quite formidable next year.

But, there may be signs of things to come. Take this: Best Buy's quarterly report this week said sales surged on flat-panel televisions (hopefully, profitable sales), which Circuit City continues to say -- every quarter -- that flat-panel television pricing depression is contributing to its financial woes. How can these types of sales be diametrically opposed at the two retailers? Something's fishy there.

Circuit City Stores, Inc. (NYSE: CC) is a retailer that may be in need of a miracle. The nation's second-largest consumer electronics chain reported sluggish results a few weeks ago, lost $62 million and announced that it was not happy with recent performance. Well, that seems quite obvious. The retailer just can't seem to get anything on track these days, amid price wars in the flat-panel television market and market share losses to larger (and more successful) rival Best Buy, Inc. (NYSE: BBY).

Adding pain to an exposed injury, UBS has downgraded Circuit City from Buy to Neutral, citing that the chain's "numerous missteps" will not be attractive to investors until "the company demonstrates clear evidence of sustained improvement." So far, Circuit City CEO Phil Schoonover has provided little visibility into what changes are going on inside the boardroom and executive meetings to revive the consumer electronics giant, and my guess is that the third time may be a charm for a private equity buyout on the near horizon.

The UBS downgrade set a target price on CC shares at $8.50 (down from $20), referencing a mid-teens multiple on fiscal 2009's projected EPS of $0.30. That level "reflects prospects for continued fundamental weakness," according to analyst Brian Nagel. On a related note, Bear Stearns downgraded CC to Peer Perform from Outperform as well, citing disruptive pricing behavior in the marketplace. The lights are getting dimmer, Circuit City. It's time to replace the light switches.

Beleaguered consumer electronics retailer Circuit City (NYSE:CC) will be reducing the assortment of flat-panel television sets . The retailer's emphasis on the latest highest standard, 1080p, may have led to a sales downturn that the Circuit City did not anticipate.

This makes sense, as it's hard for me to believe that a normal consumer will nitpick visual differences in the 720p and 1080p high-definition standards for television. But if 720p is good enough for most, and your product mix is geared towards pushing customers to more expensive 1080p televisions, sales will suffer.

That is perhaps what Circuit City saw in recent quarters, as the retailer apparently tried to swerve its flat-panel television mix more towards the higher end (higher price and higher margin) to shield itself from the price drops and margin messes with the lower end of the flat-panel television market. Consumers said "nope, mid-tier HDTV is good enough for us," and sales, subsequently, sailed away into the pockets of other retailers that had not messed with the exact product mix that would keep flat-panels flowing out the door at a decent margin.

What will Circuit City do here? The company needs fatter margins -- that goes without saying. However, will it be able to get there with a more normal flat-panel television product mix in future quarters? I am sure Circuit City CEO Phil Schoonover will be hoping that it will.