Circuit City Getting Crushed Today

Wall st. has no faith in current ceo and mgmt team. They need a cost cutter ceo to revamp the biz model.

Its all doable and has been done before.. but this Phil guy has a terrible track record thus far.
 
RAD is another good example, but they have huge debt.

Atleast they have new mgmt and much more stable biz.

CC & RAD are good 2-5 year turn around plays. Both will not be going bk.. and they have well known US company brand names.
 
My Fav. turnaround play is AMD.. i think it will make a huge comeback in 2009. They will figure out a way to make ati work with their cpus.. and will be a huge success. I am a big believer of cpu + gpu combo chip.
 
I'm very long AMD, too.

In fact, I've built a sizeable position in CC at around 3.84, and AMD at 7.25.

Two of my favorite 18 month plays.
 
Quote from ByLoSellHi:

Think online ordering of HDTVs and Blackberries, Wiis, Xboxs and iPhones, and everything digital, with the advantage of being able to pick it up within 24 minutes, rather than waiting for Amazon to ship it within a week or longer.

It's a business model to get behind.
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you can do this at best buy, too. and bby has positive earnings unlike cc.

so why would anyone buy shares of cc?
 
Quote from blackjack007:

you can do this at best buy, too. and bby has positive earnings unlike cc.

so why would anyone buy shares of cc?
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Because Best Buy has peaked, and Circuit City has either $4.00 of downside risk max, or a whole lot more potential upside.

And again, CC doesn't have a revenue problem, but a cost problem. If they can fix that, profits will flow like so much milk and honey.

BBYs near $50.

Circuit City sells 1/3 as much merchandise as Best Buy, yet Best Buy has a market cap that's nearly 30x greater (30 billion versus 700 million).
 
With circuit city CC being dropped (reported last week after the close) from the S&P500. How much of an impact will this have on the stock price as index funds readjust?
 
If you believe (a big if) the shorts, the removal in CC from the S&P will prompt institutional selling (Philip Morris will replace CC on the S&P).


Look, I'm biased, as I'm long CC, so take whatever I say with an even larger grain of salt than usually.

However, of all retail segments, I like electronics the most. In the electronics segment, BBY is the clear leader, and Radio Shack is the clear laggard, and CC is this strange entity that generates a lot of revenue, has no debt, and is currently experiencing a proxy battle for control of the board (and to oust the current CEO). So, it's a very foggy picture - but they do not have a revenue issue, which is a huge positive, IMO.

It's up more than most retailers since the beginning of 08, and its fundamentals are not exactly terrible (in fact, it trades at .05 p/s ratio, with a large cash reserve that makes the current share price close to cash value, let alone book value ($4.37 share price, with a net cash per share price of $2.50 - that's relatively remarkable).

I'm not a fan of S&P, but I think this research note is relatively accurate:

S&P Analyst Research Notes
S&P REITERATES BUY RECOMMENDATION ON SHARES OF CIRCUIT CITY
Friday 03/14/2008 11:37 AM ET

Ahead of Feb-Q results to be reported on 4/9, we are widening our Feb-Q loss estimate to $0.09 from $0.02. For FY 09 (Feb.), we project a slowdown in consumer spending and believe CC will be hard pressed to improve operating results. We are widening our FY 09 loss estimate to $0.91 from our previous loss estimate of $0.25, and cutting our DCF-based target price by $1 to $7. However, with net cash of nearly $2.50/share, significant opportunity for structural change, and trading at a trough price/sales ratio of 0.05X, we find the shares attractive at current levels.

I am staying long and hopefully not wrong CC. The move from the S&P isn't particularly worrisome to me as some of my best performers have been non-participants.

A big loss is expected. If they exceed the low expectations the street has baked into their cake, there could be a lot of upside for CC.

But it's all very fluid right now.
 
I have been in 2 local CC stores, there are hardly any sales people around and they mostly ignore customers( surely not on commission). Based on what I see would never buy their stock, business looks terrible, though I like the store and hope it stays .
 
fundamentals one hand, i think it shoudl spike in the coming few days. dont know how much. just opened 2000 shares. ill wait 4-5 days on this one.
 
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