billddrummer

Coinstar: Standing Up to Continued Challenges from Hollywood

I agree with the article.

I work at BBY, and we've seen our DVD sell-through shrink significantly for both new release and catalog titles. Even a DIS executive stated recently that consumers weren't building their libraries like they had in the past.

The BBI business model is on its way out, and consumers are seeking more convenient ways to get their entertainment fix. BBI used to be a standard stop on the way home from the grocery store. Now, with a Redbox vending machine in the grocery store, Mom and the kids don't have to make a separate stop.

Look for this trend to accelerate in the next year. CSTR plans on installing another 10,000 machines by the end of 2010, a reach that BBI won't be able to match, no matter how many kiosks they plan on opening next year.

Blockbuster's Troubles, And What They Mean for Netflix

I stopped renting at BBI years ago when a clerk told me I had to return the movie to the store I rented it from. Since I was across town, it seemed ridiculous to me. The library lets you return anything to any branch, so why not BBI?

Anyway, I never went back. That was in 2002.

Circuit City Still for Sale - Who'll Buy It?

As expected, Schoonover is gone and Marcum replaced him. Let's see what he'll do to 'unlock shareholder value.'

Circuit City Still for Sale - Who'll Buy It?

A source I use for consumer electronics research has found that the manufacturers still support CC and its struggles, primarily because it's a national chain. If CC were to be dissolved or shrink significantly, vendors would have fewer doors to sell through.

Check out this link for more:

www.twice.com/article/...

It's true that competition gives consumers more choices. But it's also true that consumers vote with their feet and their wallets. It seems to me that the votes have been cast, and CC lost the election.

Circuit City Still for Sale - Who'll Buy It?

I still think that it's too late to engineer a turnaround. The only value I see in the business is its breakup value if some of the stores are in good locations. Then, there's value in the underlying leases. As we've noted previously, the company leases all but 5 of its stores.

If shrinking and refocusing to cater to upper income shoppers is part of the turnaround strategy, it may work. (Make 'The City' the new brand, and close the subpar superstores that are draining the company's balance sheet.) Unfortunately, if CC does that, it will probably face higher prices from its major suppliers, because it won't need the same inventory level it does now. Which will further shrink its gross margin.

If Mr. Marcum is tough enough to make the decisions to close underperforming stores, then the company won't have to sell to a hedge fund to accomplish it. On the other hand, if it's business as usual, forget any return on investment unless you get a breakup fee for your trouble.

Circuit City Still for Sale - Who'll Buy It?

To User 251231,

Thanks, I appreciate your comments. It's too bad that CC has run aground, and the execs are exchanging chairs. There's a 'superstore' near my office, and the Verizon kiosk routinely has more customers than the rest of the store.

The location of the store is terrible. It's on the back side of a mall, obscured by a Safeway, TJ Maxx and a big box shoe store. Immediately south is a WMT complex including a Sam's Club with gas pumps (it's jammed, too). Next door to CC is a Sports Authority (the third sporting goods retailer to try that spot--the others went out of business). But the lease on the CC runs for another 12 years, or something ridiculous. Termination costs would be immense.

I think that's what's happening all over the chain. Poor locations, bad lease terms, low store traffic, poor service.

And Schoonover still has a job. Amazing.

Circuit City Still for Sale - Who'll Buy It?

I'm in Mr. Sullivan's corner on this one. Book value/share looks good until you factor in the costs for terminating leases at underperforming stores, brand damage done by poor customer service over the past five years, and consistently poor fundamentals (negative FCF, shrinking cash balances, lower gross margins quarter after quarter, operating losses in the 4th quarter).

All that's left is to have vendors stop supplying product, and the swan song will commence. When the credit line is used up, CC will be done.

Circuit City: Outlook Is Grimmer Than Ever

Schoonover talks about 'crisp execution' in his turnaround speeches. He and the board should be 'crisply executed' for the value they've destroyed over the past 3 years.

I'm long on BBY, but like to see viable competition, because it makes you better. With CC on the ropes, who can challenge BBY in consumer electronics? I realize that consumer electronics is a discretionary sector, subject to spending cutbacks by consumers who are being whipsawed by high fuel, food, and housing costs, meanwhile losing the value of their primary asset--their homes. But BBY executes better than any other company in this segment. And as long as the company continues to innovate, it will continue to outperform its competition.

Too bad about CC. Should have sold out back in 2005.

Circuit City Heads Towards Zero

Anyone who did a short call back when this article appeared has made good money, since the stock fell to $2/share immediately after BBI pulled its bid.

The Vultures Swoop in on Circuit City

To HingeFire,

See my previous posts on this thread. I agree with you, and think the winner of the bid will be someone other than BBI. My guess is a hedge fund that sees value in lease commitments on underperforming stores in good locations (refer to CompUsa's sale of 17 leases to BBY for reference). If BBI won out, they'd be less willing to jettison stores that don't perform. A hedge fund wouldn't have that limitation, in my view. Just close the ones that don't perform, sell off unnecessary assets (like the InterTan division, that hasn't done anything for years) and move on with life.

Either way, Schoonover needs to clean out his office.

Hey Blockbuster, Still Want To Buy Circuit City?

To michael6296,

When BBI completes its due diligence, it will probably find that closing half the CC stores is the best way to bring the company back from the dead. I'd guess that about 50% of the existing stores underperform. If you close those, the remaining locations would be good to keep.

Makes you wonder though--couldn't the CC management do the same thing?

Credit Suisse Disagrees with Citi on Blockbuster / Circuit City Deal

If Icahn ends up with the company, he'll probably leverage it to the hilt and sell off chunks of it to repay the debt.

If BBI ends up with it, Keyes will leverage it to the hilt and be forced to sell off chunks of it to repay the debt.

No real difference, except that there will be more debt to repay with BBI than with Icahn.

Are You Kidding? Circuit City and Blockbuster?

My error on the Canadian stores. It's actually $771,000 a year. Now all I wonder is what the chain will bring when it's sold to partially finance the buyout.

Blockbuster Should Jump on Positive Citi Call

I wonder whether it was just Slurpee? Maybe some Jack Daniels was mixed in with the syrup????

Credit Suisse Disagrees with Citi on Blockbuster / Circuit City Deal

I think $11 is too generous, but $6-$8 is reasonable if the company stays intact. The breakup value if you factor in the value of expiring leases in good locations is probably higher, but that would point to a hedge fund type buyout, not the BBI/CC combination currently on the table.

I agree with the Credit Suisse analyst that synergies are largely illusory, and would be extremely difficult to implement given the widely divergent cultures in the companies. CC appears to act like a wounded animal that's dangerous when cornered; BBI is actually attempting to remake its business model in response to changes in the marketplace.

If it does happen, the new company will be more like RadioShack than CC.