Circuit City Getting Crushed Today

Quote from ByLoSellHi:

Bingo.

And with $2.68 of cash per share on hand, as in not only NO debt, but a cash value of $2.68 (never mind accounts receivables, real estate, tangibles, intangibles), they are a perfect takeout target.

If Icahn can turn around distressed, indebted companies, CC represents a unique opportunity.
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I think you have some learning to do. Try analyzing their balance sheet a little better and stop being biased. Their next earnings report & financial statements will shine light whether their current stock price is undervaluing the company.

Even if there is a buyout, there is little room for a premium. Just not worth it, not in this economy.
 
Quote from Hydroblunt:

I think you have some learning to do. Try analyzing their balance sheet a little better and stop being biased. Their next earnings report & financial statements will shine light whether their current stock price is undervaluing the company.

Even if there is a buyout, there is little room for a premium. Just not worth it, not in this economy.
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Hydro, I'm really not into egos and arguing. I do know how to read a balance sheet.

CC does have roughly $2.68 in cash on hand per share. I am a disciple of Graham, so I know for a fact that CC is now trading for less than book value.

CC has no debt. None. And they have access to a guaranteed credit facility of over 2 billion, assuming they didn't want to spend their own money.

You're bearish. I'm now bullish.

There's no issue. One of us will be right, the other wrong.

Here's something to consider, though -

"On March 11th Goldman Sachs (GS) made an announcement that may give light into the future of Circuit City (CC).

An analyst note removed price targets for CC's stock saying Goldman is '"acting as a financial adviser in connection with a strategic transaction that is fundamental to the reasonable analysis"' of Circuit City's stock price."

http://seekingalpha.com/article/70166-is-circuit-city-being-sold-soon
 
I hope you understand that the Goldman report supports my argument not yours. You are not naive enough to listen to any Wall Street analyst, are you?

You're missing the picture. CC has growing AR, inventory and accounts payable. Last quarterly report was right before christmas, so that's why you need to wait for the next quarterly, which should be soon. Should be interesting how much they sold.

The company's balance sheet depends on its bloated inventory and overstated real estate. It's liabilities are accounts payable, which are GROWING. Meanwhile, revenues are declining and their salesforce is nearly non-existent.

What you are looking at is a company who has inventory they can't sell and that is on credit accounts. If they have liquidate it, you will see their assets side lose a lot of value while the liabilities stay the same. We already know that Circuit City is pretty much done for in terms of being a serious electronic retailer.

Here is something else to look at. Take the annual SG&A and divide it by the number of employees. Then compare it to BBY. Just like I said, the upper management & execs are the dead weight on this company who are milking it for whatever they can before jumping ship. Their lower level staff, which actually run the stores, are at bare minimum levels.

Buying Circuit City out makes little sense in this economy. It requires a full turnaround & re-branding. With the consumer slowing down and BBY holding a firm market share, just not worth it.
 
Quote from brettdoyle:

I like how you said you threw your chips in... because that's basically a gamble... so that is pretty appropriate.
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Bad trade. Got out at $4.00 ($.19/shr loss)
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Quote from Hydroblunt:

I think you have some learning to do. Try analyzing their balance sheet a little better and stop being biased. Their next earnings report & financial statements will shine light whether their current stock price is undervaluing the company.

Even if there is a buyout, there is little room for a premium. Just not worth it, not in this economy.
More...

Look who got owned. Any more brilliant analysis?

http://www.marketwatch.com/news/sto...x?guid={EABF4D46-9F05-47C3-B564-DC918B81BF74}
 
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