Circuit City Bankruptcy May Help
In news that for some is no surprise, Circuit City, the second largest electronics retailer in the U.S., has filed for bankruptcy. The company plans to stay open for business through the holiday season, and in what seems an odd statement, it may actually help the situation for Circuit City, but also for several companies that sell electronics gear.
Consumer confidence is low, and everyone is watching each dollar more closely. Consumers are looking for deals, and knowing that Circuit City is in bankruptcy may spur value conscious people to shop at the retailer, and by extension move product. While I can not picture people buying any “extended warranties” (typically a money maker for electronics stores) from Circuit City, I do see a potential for people to take this opportunity to pick up gear at what they perceive as lower prices.
Circuit City stock fell to 11 cents per share before being halted.
“Without immediate relief, the company is concerned that it will not receive goods for Black Friday and the upcoming holiday season, which could cause irreparable harm to the company and its stakeholders,” Besanko said in the filing.
Circuit City Stores Inc. announced a week ago it planned to close 155 of its more than 700 U.S. stores by Dec. 31. The stores are spread throughout 28 states, including multiple locations in areas like Phoenix and Atlanta. It is laying off about 17 percent of its domestic work force, which could affect up to 7,300 people.
Consumers seeking retail deals may bolster sales of some electronics items, but the shelves may be more bare than people anticipate, because any product not already delivered may be relocated to other stores. For satellite radio, on line stores such as SiriusBuzz sponsor TSS-Radio may see a benefit, as they offer great value combined with stability.
It will be interesting to watch satellite radio inventory levels at Circuit City.
Position: Long SIRI.
How could this be beneficial ? Boy are we just hoping beyond hope for a silver lining, aren’t we.
I recently walked into a Circiut City in Danbury CT and couldn’t believe how little Sirius/Xm product was on display. It was sad to stand there and look at a couple of antennas and two or three radios on the display; 90% of the space was empty! Of course, the few items that they had were relegated to the very back of the store, where half the customers never venture. No wonder retail is doing so bad – the displays are hidden and even if by chance you happen to find it…… there’s nothing to look at!!! What a joke.
Tyler, C’mon. You know better–at least I think you do. Your article makes zero sense. And, btw, your posts have become sporadic in both quantity and quality.
Can we honestly ever hope to understand Sirius’ poor displays? Or lack of merchandise at retailers? Or general lack of advertising? I think there is something SIRIUSLY wrong with the companies approach to selling product. I mean, I think I have seen DRUG DEALERS advertise more publicly then our beloved satrad company… WTF!?!?!?
Who needs Circuit City when there is Best Buy?
Circuit City has always sucked as a retailer – they deserve to fail! As a long time electronics shopper, my experiences at Circuit City were always horrible. Horrible management, horrible staffing, horrible displays – the stores were always dark, messy, and dirty. Customer service was always horrible. Their commission sales model sucked – it was worse than being at a car lot. The management at Circuit City was clueless…
They deserve to fail and I hope they get replaced with someone that can do a better…
job.
The employees at Circuit City were frequently rude. They looked sloppy too – with their unlaundered shirts hanging out, hair messy etc. A lot of them had body odor and were way over weight too….
Horrible staffing………
They deserve to fail…..
I waitied 4 days for this article? I agree with SXM. Is it that bad Tyler that we need to depend on a situation like this to sell radios ????
This is really funny. My wife and I were in circuit city two nigths ago and we were almost laughing at thier prices. They had Kung Fu Panda for like 21 dollars…decided to pick it up at walmart for 14. They are going out of buisness becasue very few smart shoppers go there for electronics.
On a sad note, they do have the best laid out selection of satellite radio products I’ve ever seen (Colorado Springs Area)
Remember when Circuit City was a favorite in “Good to Great” by Jim Collins? Remember when we thought being big gave you clout with customers and vendors to produce long-term returns (Michael Porter’s 5 Forces Model)? It’s time we recognize that the old approach to management doesn’t work in a rapidly shifting competitive world. There are winners in today’s market, but they follow a different approach. Read more at http://www.ThePhoenixPrinciple.com
SIRI should hook up with starbucks having them handing out discount coupons with each coffee purchase at their stores and encode it so siri knows it was starbuck coupon and can kick them back a little $$$ for each sub.
Gents,
Off subject but where can I hear about the Conference call?
OTOH, Best Buy hourly paid employees on the floor are not sufficiently motivated to make sales. They don’t seem to care if you buy or not. Getting product information from them is like pulling teeth. I refer to tv’s, computer, camera and AMFM/cd portable stereo purchases. I can not share ANY personal experience vis a vis SIRIUS or XM inquiries or purchases.
“It will be interesting to watch satellite radio inventory levels at Circuit City.”
Sorry Tyler, but I don’t see any value for Sirius in Circuit City going into Bankruptcy protection and watching inventory levels at a bankrupt company will be anything but “Interesting”
How much does circuit city owe siri for equipment they have on hand…will siri get named in bk and lose that money too?
REM….
I am in the middle of a vacation. Was off since last Thursday….flew out west for a few days. Am now getting ready to fly to Orlando for a few days. Sorry that I am not posting, but I have been very busy with my business, and wanted to take a brief vacation before things get very-very busy.
Tyler – welcome to Sunny Orlando. We have a cold front comming in. Mid 50’s to mid-upper 70’s. Man I love Florida!!! Intersting conference call. Cant wait to get your post.
So who all thinks Mel is full of shit?
Anyone get any faith booster in share price?
I am SIRI long with close to 30,000 shares. I felt good about the call….
just listened to the CC. Tuna Amobi specifically asked about “parsing” the numbers relative to “OEM vs. RETAIL”
I did not hear an answer to that question . . . but again, Mel had to use the word “sucks” to describe the current environment (wish he would quit saying that already).
Interesting how the RS and new equity was raised by Mel only at the end with no opportunity for question. Why didn’t any of the analysts raise this issue other than Amobi asking about a “Plan B” and “how much dilution can be tolerated” relative to Feb ’09 debt
With a reverse stock split on the table, 50-1, we got screwed, face it. If Mel gets the financing done we will not need a reverse split, or have to worry about delisting. Does it matter if we get delisted? The stock actually trades as if it was OTC anyway….down..down..down. 30,000 shares shrinks real quick with a 50-1…ouch.
oh . . . and I didn’t like the answer to the “liquidity/cash burn” question by Bart Crockett . . . I felt like they were dancing on that answer until Crockett pressed with “is there enough cash to get through the Feb financing at a minimum?'” to which a faint voice could be heard responding “yes”
mgmt seems evasive to me when they get the cash burn/liquidity question
Mel pulled the same thing when Winekes asked that question back at the last CC (“look at the Q”)
anyway, where was the great one (Wienkes) today?
too much time spent on the Goowill Impairment Effect and GAAP rules . . . who cares. we already know its M2M accounting and that the goodwill is a residual value. so what. we get that.
these analysts should be hammering on the debt . ..
DEBT, DEBT, DEBT
and I mean some specifics. what rates are these “Banks” now quoting?
how does this management “confidence in refinancing the debt” relate to the RS and new equity?
and BTW . ..
Wienkes didn’t have a question I guess . . if he was even there . . . but no doubt he will get the word today from Lloyd Blankfine to “back his ass into” a $0.1250 price target or clean out his desk
Wienkes hits these targets folks cuz he has been backing into them . . it’s not rocket science. The guy doesn’t even bother to get the metrics right; just read his garbage reports
Lloyd will be feeling his oats today with the new AIG bailout
I would initally disagree that this would be a good thing, but coincidentally, just today, a colleague returned from lunch where he visited a local CC store having a liquidation clearance. He purchased 2 car kits, a SATRAD ready head unit and Sirius connect Tuner. He will be purchasing a sub for himself and his wife. He bought everything at 30% + discount. Cheap hardware may very well bring in more retail subs… good!
Tyler, what you know about retail selling you could also write down on a matchbook cover and have lots of room left over.
Circuit City has some serious problems. They have a very poor sales staff after firing the higher paid and trained sales staff over a year ago, in what was suppose to be a costcutting move to save the company money but actually cost them in terms of lost sales. Circuit City credit cards are no longer valid. All 155 stores that are being shut down have signs posted that state, “ALL SALES FINAL! NO REFUNDS OR EXCHANGES! NO CHECKS OR CC CREDIT CARDS ACCEPTED!” Now, do you really think that people are going to load up on satellite radios as gifts, when they can’t be exchanged or returned? Circuit City also doesn’t have that much satellite radio inventory to begin with, so don’t expect a huge surge in retail sales because even Mel Karmazin admits that the retail sector is doing poorly. Retail is doing so poorly that is was DEI who decided to severe ties and not renew their distribution agreement with Sirius, not the other way around. By the way, Tyler, I haven’t heard anymore in regards to that bogus story posted on this web site about that alledged new distributor that wanted to jump on the Sirius bandwagon.
Tyler, I don’t know where you come up with some of the crap you write about, but I can only imagine that it’s when the sugarplum fairies come to visit you in your dreams. You overreach too far tying to write something positive about Sirius that is just plain BS, and you do a disservice to people you constantly put on a hummer because they have read one of your superfluffed articles. Maybe I wouldn’t be so crtical of you if you would learn to tell it like it is, instead of how you pretend it to be. People may not always like to hear the truth, but name me one person who likes to be lied to. You can’t because nobody likes to be deceived, especially not by people who abuse the power of journalism.