phil'spal

Circuit City Falls Further: 'Bring Out Your Dead'

hi guys:

no major surprises, but here's a brief update on the Intertan story:

(www.globeinvestor.com/.../)

some interest shown in a purchase as a going concern including the rumoured best buy interest and the management buyout bid. still all speculation, of course, and any acceptance of a proposal is subject to court approval, but the article does echo my concern about the difficulty in finding financing to get the deal done. if management wants to buy it out, i hope the courts insist on them putting a healthy chunk of their own cold hard cash on the line and put safeguards in place to prevent them from milking the company dry, stiffing creditors and/or shareholders and repeating all of the abuses we've seen at CC before they walk away from it after the golden teat has dried up.

Circuit City Falls Further: 'Bring Out Your Dead'

bill:

the question still remains: who is willing and/or able to finance the project? they didnt have much luck finding anybody for CCTY. granted, this is smaller scale, but the banks have their hands full with their own problems and the retail sector is in shambles. it wont be any picnic finding private financing either, but who knows.... if the price is right, anything could happen.

maybe cimino could hook up with john thain and buy into it. of course, the first thing to get done would have to be the office redecorations.

Circuit City Falls Further: 'Bring Out Your Dead'

hi guys

today was the deadline for filing of proposals for the sale of The Source in Canada. that's about all we'll get for now, since nobody's offering any particulars to the public. i did find an article which explains the delay, but says nothing about the terms of operation while in this phase.

"Through a third-party, court-appointed monitor, potential buyers were
encouraged to show their interest last month. In all, 16 groups expressed
interest in buying the Canadian corporation. Ronald Cuthbertson left his job Dec. 17 as president of InterTAN in hopes of putting together a bid
proposal.
Some were selected from that group to make formal proposals. That deadline is today. Who is pitching to purchase the Barrie-based corporation and how many groups is not being revealed. “It could be weeks, it could be a few months…and then announce a winner,” "

(www.thebarrieexaminer....)

there ya go... more drama, suspense and intrigue. have a great weekend!

Circuit City's Liquidation: Schoonover Could Have Saved It but Didn't

bill:

you're right that carrying unproductive real estate had a lot to do with their unravelling but let's look a little deeper. not only did schoonover neglect that aspect of their operation, (it was only weeks before the great collapse that they finally scrubbed their new distribution centre) he tried to 'turn it around' through expanding their store count. wrong approach and a bad idea when you consider that a bigger problem was that their year over year same store sales were dropping. in effect, the problem was not directly addressed. their 'solution' to slumping sales only compounded the original problem. however, again, you're right, harvard biz school can perform the final autopsy because it's all academic from here... except for the intertan issue in canada. court date is for tomorrow. mark me down for 'no credible buyers could be found'.

wow! i just passed 100 posts!

Circuit City Falls Further: 'Bring Out Your Dead'

sorry, canadad

i dont know enough about the court rulings to answer your questions. we'll both find out tomorrow

Best Buy Bounces on Circuit City Closure

constructe:

as right as you are about management greed, i wish you were right about the 50% margins! big tickets are nowhere near that, and the terms arent nearly as forgiving as that. suppliers will eat you alive if you let them. it's a tough racket, and dummies don't last forever. (refer to headline. i rest my case)

Circuit City: Closing Time

bill:

looks like in the short term, anyway, BBY (up 8% y'day) is the biggest net beneficiary of CCTY's fall (other than lawyers and liquidators). here's hoping they dont get arrogant or complacent. it's a great opportunity for them to cultivate a whole lot more market share. there's a definite need for a specialist electronics outlet, the kind that dept stores just cannot provide. if they make sure that their training programs are a major priority and they can offer their customers a heightened sense of confidence in shopping there, i think they'll be able to create an incredible brand with a truly unique presence in the market. when the economy turns around, BBY should be able to offer what no other electronics outlet can and in so doing, will surely make some big coin for its investors.

Circuit City Falls Further: 'Bring Out Your Dead'

hi guys!

i picked the wrong day to defrag my hard drive! i'm still catching up on all the feeds, releases and blogs. if i got it straight, the canadian court date is jan 23, and they're looking for a buyer of the going concern. i may be all wrong, but this could easily end up as a repeat performance of their day in US court. difficult economic climate, and reluctant lenders limit the number of possible buyers. whoever they may be, they will have to have deep pockets ,an established network of suppliers and an uncharacteristically optimistic view of the company's ability to prosper in the existing environment. granted, from what i've seen, the cdn operation didnt do as badly as their american stores, but if somebody is going to tell me that they actually did well, they should be prepared to show me. there's no victory in doing big dollars when it's all done with loss leaders. we're coming into the days of retail doldrums. for the most part, the market has been glutted and the consumer already has all the toys and all the maxed credit cards they can use for now. pricing pressure will be high and margins will be squeezed. short term cash flow is going to be light. the major competitors are all still there as are all the fixed overhead expenses. we might be in for a kickass 2010 retail christmas (who knows?!) . it's a long wait between then and now but it's going to cost any buyer dearly to wait and see in the meantime. nope. i'm sorry, but i cant see a happier outcome in canada.

Circuit City Falls Further: 'Bring Out Your Dead'

Good Morning, Guys!

i had a few minutes to kill this morning, so i eavesdropped on the google finance ccty discussion board. i think it should be formally recognized somewhere as the official meeting place of panic and greed.

Circuit City Falls Further: 'Bring Out Your Dead'

bill:

i think you might be right about Pliego, but he's disallowed from being an officer or director of a US company til 2011. (www.forbes.com/markets...) the walmart spin surprises me but i would never challenge it in this environment. hey... it could still even be a 'pump and dump'. the next few days are going to be tense in richmond.

we've been making some good calls here, but turning it into cash is still the big challenge. there's so much static and spurious sh*t flying around that even the best shot callers can get whipsawed in a heartbeat. seems like there's always something that comes right out of left field that squashes the best analysis like a frog on a freeway. throw the selective release of info (fact or fiction) from head office into the mix and randomness becomes an even bigger factor.'ceteris paribus' (all things being equal) is a condition only occurring in textbooks and wishful thinking. the boys that are trying to make money from this are either insiders or crap shooters.

i havent seen any reports as yet. i thought they were due out on the 9th. did i miss something?

Circuit City Falls Further: 'Bring Out Your Dead'

they're 'in talks' now! prospective business partners are suddenly beating a path to their door, anxious to invest in their enterprise. cue the fat lady: "one more time! this time with a little mooooore feeling!"

Intertan, the canadian company filed a report today as well, saying that "the Company expects to receive formal proposals before the end of January." from prospective interested buyers. (www.marketwire.com/pre...) this is a little more credible, but again, no details given other than a play (or is it a plea?) to keep the circus in town to the end of the month.

Circuit City Falls Further: 'Bring Out Your Dead'

bill:

further to my last posting:

with no redeeming information coming from the latest news, i cant imagine their situation improving at all. if anything, it continues to worsen. the expense concerns that you mention are all valid but everybody is talking about hotel rooms, you-tube PR plays and tinkering with severance pkg's for phil. it's too late to be just nibbling at the edges. at next reporting, there wont be anywhere to hide. that is probably the point at which the big picture will finally become undeniably obvious and the last benefit of the last doubt will be soundly snuffed. If the banks and creditors continue to finance this farce, i regret to say that they deserve all the misfortune that will surely follow.

and on that happy note, Happy Holidays and here's to a much happier New Year for us all!

Circuit City Falls Further: 'Bring Out Your Dead'

bill:

i read the articles, (thanks for those). i was curious to see how the numbers shook out for the season. i cannot believe that after reporting that "Sales at Circuit City have fallen between 43 percent and 50 percent since the chain filed for Chapter 11 protection on Nov. 10...almost double the retailer’s projected sales decline of 28 percent", Cimino has the temerity to tell us that these results “should not be considered a negative,” my eyes rolled so far back in my head, they got stuck there for a few seconds! PLEASE tell me in what world or cosmic dimension are these results considered positive? unless they've managed to double their margins, the problem is compounding. ok, i should get into that mindset for my bottom line comment: dont worry, there's only about 12 or 13 cents downside risk on the stock. how far wrong could ya go?

Circuit City Falls Further: 'Bring Out Your Dead'

The landlords are going to go for the throat. The lawyers are going to have a field day and it's going to get dragged out even longer.

Circuit City Falls Further: 'Bring Out Your Dead'

bill:

congrats on your 500th post!

i just saw that BBY was offering the sep. paks. to head office staff. it looks like they're going about it the right way. stock is up big today too, so the market likes the strategy. note the contrast with decimating the best of their sales force as per CC last year. i think it's a matter of being proactive rather than reactive. good call by management. the market share migration from CC to BBY will take a while before it's really noticeable. liquidations and panic selling by all the players cloud the immediate effects. in the long haul, BBY should come out stronger for it.

canadad:

i'll second bill's kudos for your research! i perused your links. gotta tell ya... it's a giggle-free zone.... but most interesting nevertheless. i cant wait to see the list of prospective buyers. that's due tomorrow! i'll really stick my neck out here and say that it's not going to be a long one. i cant think of anybody out there that's cash rich and cant think of one thing to better invest their money in besides a failing electronics retailer with a scandalous legacy and a questionable future in a crummy sector. in this economy, i'd be buying into soup kitchens before i'd be buying intertan. Hmmmm.... unless they co-opted.... "FREE bowl of soup (with crackers and government cheese) with every iPod!"