Tuesday, November 11, 2008

Circuit City Takes Eleven

Two years ago, the article was entitled "Buying Opportunity Seen for Best Buy, Circuit City" [source]. At the time, Circuit City's shares traded at roughly $25/share:

“Over the past few years, shares of Best Buy and Circuit City have tended to trade lower immediately following Wal-Mart’s event and rebounding shortly thereafter,” said UBS analysts in a report. “We recommend using any Wal-Mart-related weakness in the consumer electronics stocks as a particularly attractive buying opportunity.”

...UBS said Wal-Mart’s emergence into the consumer electronics market gave investors the jitters. Analysts urge them not to fret, considering stores such as Best Buy or Circuit City, the largest of their kind in the U.S., specialize in consumer electronics and will therefore always have an edge on Wal-Mart.

UBS said in the report, “We view these concerns as overblown.”

And today we get "Circuit City Files for Bankruptcy," courtesy of AP/Yahoo Finance [source]:

Circuit City, which has had only one profitable quarter in the past year, has faced significant declines in traffic and heightened competition from rival Best Buy Co. and others. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers.

Before being halted, Circuit City's shares traded at (Chapter!) eleven cents.

Buying opportunity, indeed.


— Posted by Michael @ 9:06 AM


Apparently Best Buy may take over some of the locations that were previously held by Circuit City. This comes as no surprise being there were a lot of complaints of how Circuit City was managed and you always hear stories from former employees about bad practices.


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