Circuit City -- What's next?
 

There is an interesting article in a trade magazine that suggest that the recent operations of Circuit City are in preperation of a possible sale of the company.

The move to reclass store's with hourly employees, remodel's and smaller locations are seen as an "attractive" to bigger suiters, some of which are rumoured to be Sears and Wal-mart. Both latter companies for years have been somewhat vocal about expanding their electronics business seperate from what they have now.

And with news like this, it;s easy to think that Circuit could be sold or taken over in the next few years.

The article does mention that Best Buy would not be a likely buyer in a takeover bid as they have positioned themselves in almost every market that Circuit City has stores and are in better locations and have more buying power than CC.

I'm going to try to find the article on the web. It is a good read.

DIVX- the best way to watch movies at home!

rotfl

It's no surprise. Ever since the DIVX fiasco, they've lost major ground to Best Buy stores. I think BB is adding stores probably at a rate of 3x - 4x times that of CC.

DIVX was the beginning, but CC really lost to BB when they exited the appliance business.

I wish somebody would take over Circuit City. The store in my area is TERRIBLE!! Might just be that location is being poorly managed.

It wouldn't be a surprise to see some store closings in the near future to weed out the unprofitable locations to make their financial standing a little better.

CC did just close 19 stores, think it was less than a month ago.

I enjoy shopping at CC for the simple fact that I'm not asked to buy service plans. Also because the store is always empty! :lol:

I have been amazed for a few years now . . . amazed that CC is still in business. First of all, I can't believe that they survived the DIVX fiasco, but kudos to them for toughing it out. Second, it amazes me that a company that does so much to alienate its staff and customer base can function from day to day.
<P>Let's just hope that a buy-out can be properly used to make a rebound. I don't want to see any retailer go out of business (except maybe Blockbuster). Don't forget Best Buy's take-over of Musicland Group that turned disastrous. Whoever buys them out, make the changes that need to be made, don't try to do business as usual. Heck, let's all throw in a few bucks and buy them out ourselves! DVDTalk City!

We'd never be able to agree on how to run the place. Think Simpson's episode where the "smart" people took over the town b4 Stephen Hawkins came in to shut them down.

I agree. No offense to some of the DVDtalkers we have here :)

Well, as someone who worked at CC I can tell you that many long-time employees think the company will get sold at some point. It's not like it hasn't been happening slowly, either. The Mexican businessman who owns CompUSA has been slowly buying up large chunks of Circuit City stock. He made an unsolicited offer last year to buy CC, but was rejected.

Didn't that businessman also own Prodigy b4 selling it to SBC?

I once dated the daughter of one of the former VP's of CC and per my conversations with him, their main strategic mistake was not Divx, but rather, in not offering the 1 year/Multi-year payment and interest plans that BB started a few years back when they were nothing more than a growing competitor. As the then market leader, they were extremely recalcitrant to follow BB's lead in this respect, assuming myopically, that their trained sales staff and customer service would outclass anything offered by BB's minimum wage employees. The end result looking back is that all a customer is truly concerned with is price. If you're going to offer someone 1 year or multiple years to pay back an expensive purchase then customers will flock, particularly when your competition refuses to offer something along a similar line. This advantage enabled BB to start a massive growth spurt which allowed them to purchase property and place stores at or near main demographic regions served by CC and thus slowly but surely steal market share. By the time CC execs had realized the fundamental flaw in their thinking and started offering comparable plans (6 months), attempting to heavily advertise their sales staff advantage and remodel older units the damage has been done. They had spent a HUGE amount of capital in their remodeling plans in any effort to compete with BB's open layout floorplan, which subsequently left them short on dollars and they have been playing a futile game of catchup ever since. Simply due to the number of prime locations they still have I wouldn't at all be surprised to see one of the companies mentioned previously take an avid interest in eventually attempting to buy CC out at some point in time.

That's one idea, but I don't think that divx or promotional offers made Best Buy and hurt Circuit City. I think Circuit had the mindset that they were on top and that other electronic stores were folding and an upstart like Best Buy couldn't get the backing to mount an offensive.

My old CC was very poorly stocked/organized with regard to dvds.

Circuit City reported 4th quarter earnings of $89.5 million on revenue of $3.25 billion. For fiscal 2004 CC posted a loss of $89 million compared to earnings of $82 million last year.

However, CC bought InterTan, a Canada electronics retailer and MusicNow, an online music service. InterTan distributes product through license agreements with Radio Shack, Rogers Plus and Battery Plus, will be aquired for $284 million in cash. The MusicNow deal was not disclosed. These deals are expected to close by the second quarter of fiscal 2005.


In case you're wondering, Best Buy posted 4th quarter earnings of $469 million on revenue of $8.4 billion.

*Haha* Good one. I remember when a Circuit City employee mislead us into buying a DIVX player. He told my dad that we would be able to actually watch the movies for 48hrs of playtime. You know, like for $5, I could watch a two hour movie 24 times over the next year; that sort of thing. We got home, talked to a friend about it, and quickly exchanged it for a regular DVD Player. Apparently, my friend had been burnt after being told the same thing. They got a $3xx.xx bill for their first month.

As far as what they company is doing... Meh'. Circuit City doesn't offer anything more than the other electronic and retail stores around me. They're not better or worse; they're just indifferent. I couldn't care less what they're up to. On route to the closest Circuit City, I pass by Target, Best Buy, Sams Club, and Ultimate Electronics.

The closest Circuit City is a new-build, and seems to be wells-stocked and very clean. And it's across the street from a new-build mall, which is very nice. But just no reason whatsoever to go there.

Btw-ythe buyer that made a play on CC was slim someone(not shady) he now owns good guys.

DIVX was pretty much gone by the time I entered the DVD world (2000). How exactly did they work? All I can really remember about them is their prices were cheaper than DVDs, but you had to pay each time you watched one?

You get the player and hook it up to a phone line. You buy the $5 DIVX that you want, and 'activate' it. After it's activated, you can watch it for two days. After two days, it's blocked, but can be re-activated for another $5 or so. And, if you wanted to upgrade it to unlimited playback, you had to pay another $17 or so.

How embarassing... When they stopped it, Circuit City said they were sorry, and gave $200 refunds on the players, and $5 refunds on the DIVX discs. Not sure what they did with outstanding bills.

I talked a few years back with a (now former)GM of a Best Buy. He said at the time when DVD and Divx were going to be in the stores, Best Buy and other retailers had the option to buy into the Divx genre. This was during a time when BB and Circuit were seen as equal. He said there were many in the "higher up's" at the BB corporate office who tried to get Divx in the stores, but they failed after a majority were swayed by the concept of the DVD players and movies. There was also concern because Divx was first out the gate and when DVD was released to the masses there was only a handfull of titles to offer.

Interesting how things turned out for the product and the companies that supported them.

Actually, it was $100 per player, and nothing for the discs. I remember feeling quite jipped cause I had just bought a DIVX player at the time (CC gave me a good deal because I was building my first home theater almost exclusively with them).

I remember getting alot of great deals on the discs after they announced the cancellation of the program though. CC clearanced the things out for just a buck or 2 which was a steal, since you can't rent movies that cheap.