Is Circuit City Going Bankrupt?

Since the end of May, Circuit City’s stock has lost about 87% of its value; the company has fired its CEO, lost a $1.3 billion takeover offer from Blockbuster, and posted quarterly losses of $239.2 million. Now the Washington Post says that the company lost a recommendation from a firm that advises manufacturers on whether to ship goods to retailers – meaning that Circuit City may be having trouble paying its vendors. Are they ready to go under?

Motley Fool thinks so. They placed Circuit City at the top of a short list of retailers that you could “kiss goodbye.”

The new CEO recently hired some independent advisers who will presumably work to save the company from itself, but is it just too late?

Circuit City’s shares are currently trading at $0.42. You might want to use up your remaining gift cards… just in case.


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  1. hills says:

    I actually don’t mind CC too much – Like them better than Best Buy!

    • downwithmonstercable says:

      @hillsrovey: +1 on that. I’d much rather go there than BB. And as much as some of us hate certain companies, it’s never good when they go under. That’s lot of jobs lost and tax revenue local cities would otherwise be getting.

      But, there is still that little bit of satisfaction you get when horrible companies go down in flames. :)

    • Raiders757 says:

      @hillsrovey:

      That’s funny. In my area, Jerkit City has a terrible selection, and very bad service. The Best Buy across the street has great service, and a lot more to choose from. The store is even kept up better as well.

      To be exact, I have never had the problems with BB that I read about here and elsewhere. I must live in the twilight zone.

    • BigBoat says:

      @hillsrovey: Sure, in the way I’d rather be shot fifty times instead of a hundred.

    • ViperBorg says:

      @hillsrovey: Honestly, I’d rather wait on the shipping from TigerDirect.com or NewEgg.com than walk into either of those stores. For the need in a pinch stuff, there’s a Fry’s close-by.

      Or if I really need to, Radio Shack. **shudders**

    • loueloui says:

      @hillsrovey:

      While I’m no fan of Circuit City in particular, I’m afraid of what the loss of competition would do to Best Buy. Maybe the yellow and blue would swirl together into green, and they would bust out of their collective khakis and wreak havoc on the collective electronics consumer.

      Sat what you want about Circuit City…they never called me a devil [online.wsj.com]

    • AnF-DuDe says:

      @hillsrovey:

      In my area the Circuit City employees don’t know anything!
      None of their display models work, and they are also VERY lazy…

      But the BB in my area the employees at least know enough to get you to buy whatever, and I actually get asked if I’m finding everything alright…

      So from my personal experience, I prefer Best Buy.

  2. Franklin Comes Alive! says:

    Not to sound omniscient (in fact, I’m sure I was far from alone in this thought), but my quote from Jan 8 of this year I just found:

    Franklin Comes Alive!
    11:05 AM on Tue Jan 8 2008

    CC is the next CompUSA, no doubt. They’ll be in bankruptcy by the end of 2008.

  3. tande04 says:

    Hope they have some decent going out of business sales.
    There was an iPod dock I was eyeing their just the other day…

    • Canino says:

      @tande04: Yeah, maybe they’ll have a 50% off sale and bring the prices down to buy.com level.

      • dweebster says:

        @Canino: Or they’ll go the way of CompUSA’s liquidation: 5% off full retail on beat-up demo laptops, old stereo wires with electrical tape gunk all over ‘em for $50 bucks, etc. I’ll visit one store and if they’re playing THAT game then the liquidators can KMA.

  4. fordpickup says:

    I hope it will have a better going out of business sale than CompUSA.

  5. vastrightwing says:

    Oh please! Where else can I pay more to get less? Oh, Best Buy. And as a bonus, they will sell me a fictitious warranty protection to boot!

    Perhaps there’s some hope the government has a provision in the bailout bill for Circuit City somewhere.

    • @vastrightwing: The warranties aren’t fictitious, just mostly useless.

      • Keavy_Rain says:

        @InfiniTrent:

        Only true if you didn’t by an Xbox 360 between 2005 and 2007.

        I feel sorry for anyone who bought one back then that didn’t get a store warranty extension. I went through three in a year!

        All I used it for was playing games and watching movies.

        As for Circuit City I say let them go if need be. We got too many of these stores as it is, not counting their cheaper and better online clones.

      • Babelfish says:

        @InfiniTrent: Sometimes useless, other times not. They did raise prices recently, so most of the warranties are overpriced now, but in the past a laptop warranty was a solid investment, because the warranty price for a 2-year basic was usually around $130, and included unlimited battery replacement — and they didn’t bother to test your old battery first.

        Likewise, I bought an open-box Onkyo receiver in January, and the 3-year warranty was $16. In another two years, I’m pretty sure the receiver’s gonna get backloaded, a capacitor’s gonna blow, and I’m going to get a few hundred dollars back. (Also spend $3 on a warranty for an open-box mouse. The thing was on display for almost a year, so I can’t imagine it’ll last longer than two years, so I basically gave myself $17 by buying the warranty.)

        FWIW, the warranties are still valid if CC goes under; they’re covered by GE.

    • Raiders757 says:

      @vastrightwing:

      They can’t sell you the warranty if you refuse to pay for it.

      If it didn’t happen 13 years ago, making it irrelevant now, I could tell a great story about CC and how their corporate HQ lied and sent my future/current wife on a run-a-round of highly unprofessional proportions. All because she had proof my CC credit card had a zero balance due.

      BB always has lower prices than CC in my area, and will price match as well. I don’t want to see either store go, as direct competition is a great thing for the consumer.

  6. mazda3jdm says:

    The only thing that stores got going for it is that BO smell when you wall though the doors.

  7. jimmypopjr says:

    I just spent a few bucks to buy some shares of CC. I figure, if they pull themselves out in the next couple years, sweet. If not, I’m only out a few bucks.

    Here’s hoping.

  8. XTC46 says:

    time to buy stock. Someone will buy them up atleast for their name and the price will go up on the stock.

    • Notsewfast says:

      @xtc46:
      Except that a smart buyer would probably not buy a company that has outstanding leases in hundreds of cities around the country who’s citizens are afraid of spending at the moment.

      If there is a buyout, it will likely occur after they file for bankruptcy so that they can cherry-pick what they want while leaving the rest for the attorneys.

      If they file for bankruptcy, your $0.43 stock is worthless..

    • Snarkysnake says:

      @xtc46:

      Not likely.

      Any buyer with a lick of sense knows that they can get the same name or any other piece of the carcass for a lot less after a chapter 11 (or 7). Buying stock now is like buying a (cheap) ticket ona ship sure to sink.

  9. Tmoney02 says:

    Thanks for running my tip! And yes it seems CC is doomed. I think after the new year we will be seeing most if not all the doors closed. So don’t buy any of their store warranties!

  10. 6a says:

    This is really starting to seem like that aunt that just won’t die.

  11. Semi-inside information: Expect Circuit to declare bankruptcy in the next three days.

  12. BrianDaBrain says:

    I tend to get better service at my local Circuit City than I do at the Best Buy across the street, so I may actually miss them if they go under.

    • HogwartsAlum says:

      @BrianDaBrain:

      Me too. Ours is pretty good. The Best Buy is noisy and the salespeople are jerky. I wish I had some money; I’d go buy something right now to help them out!

      • Anonymous says:

        the only reason you get great service @ Circuit City as opposed to Best Buy is that there isn’t any customers to take up all of their sales team. Best Buy could use some help though, I’m not completely letting them go without a couple of slaps in the face. But the last time I walked into a Circuit City, I swear I saw a tumbleweed cross my path.

  13. The Stork says:

    They’re on their way to bankruptcy, but they’ve always had lower debts and cash on hand so I’d be surprised to see it happen before next year. It’s possible, but I wouldn’t bet on it.

    Given their lackluster position in real estate and diminished brand another company would be insane to purchase them in this economy. Someone’ll probably bite, though.

  14. krom says:

    I bet their six-month-long clearance sale will be a complete joke, too.

  15. Trick says:

    Good riddance to rubbish. Glad to see the majority of Americans are staying away from that trash dump.

  16. mbz32190 says:

    If they aren’t gone before the end of the year, I’m sure weak holiday sales will be the nail in the coffin.

  17. strife1012 says:

    I worked at CCity for 4 years.

    Just told my Manager that I Quit since they look like they might not be able to pay employees at this rate.

  18. Onion_Volcano says:

    I heard on the radio today they are opening a new circuit in Richmond. Probably a bad idea. They have some washed up NFL players at the grand opening this weekend.

  19. Quatre707 says:

    Circuit City and Best Buy stores are different everywhere, for various reasons. What needs to be looked at is the differences in the two which are universal and company-wide.
    Two stick out for me; the first is Best Buy’s employee training program, from customer service, to product and service knowledge and skills training, results in far more knowledgeable sales persons. The other is Circuit City’s lack of a restocking fee on televisions, which is abused far to much as free rental, resulting in losses for Circuit City.

    • The Stork says:

      @Quatre707: BBY doesn’t have a restocking fee on TVs, either, and when I was at Circuit it never really hurt us. We’d rock out around the Super Bowl and only get a few returned. Most of our returns overall were actually swaps for something different.

      As far as training, BBY’s ain’t that great…but CC’s is non-existent. Four years ago the eLearnings were worthless, and the best knowledge came from the managers and experienced salesmen. The latter were all fired and there are far less of the former.

  20. DePaulBlueDemon says:

    I would not care if they went under, but I am concerned about all the employees who may lose their jobs. :(

    • Wolzard says:

      @DePaulBlueDemon:

      I think that’s the one thing that saddens me/disturbs me the most about those that want Circuit City to “burn in hell” and such.

      Yes the stereotype is that the vast majority of employees are high schoolers/college kids who don’t care. However, there are plenty of adults in the business that work there because they love their job, and give 100% every day they are there. There are thousands of associates like that accross the country, and it’s sad how many people are thrilled with the idea of them losing their job.

    • Barney_The Plug_ Frank says:

      @DePaulBlueDemon: I do care if they go under. Best Buy left to its own devices will only lower customer service and raise prices w/o Circuit City’s presence. I’m not saying Circuit City was particularly good, but they were another option to Best Buy.

      • endless says:

        @danno50:

        definitely agree, though i think best buy wrote these guys off months ago.

        best buy is more concerned about walmart and online and how to differentiate from those companies than CC.

    • dweebster says:

      @DePaulBlueDemon: Didn’t they already FIRE most of their employees already? [www.msnbc.msn.com]

      A good portion of their current employees are basically ‘scabs.’

    • Sparkstalker says:

      @DePaulBlueDemon: All those lost jobs concern me as well. Since their IT department is here in town, it’s going to saturate the market…which means I’ll have a harder time finding a new job.

    • Anonymous says:

      @DePaulBlueDemon: Thank You! finally after reading all the comments on this article someone has a heart, yes this there are humans who work for CC in decent positions that have a home & family to support, the rest of the world is just concerned about the going out of business sale, for those cold hearted folks let’s just hope it never happens to you, remember what goes around comes around

  21. SandersCandisay says:

    Scared for America. We don’t have a market where we can have 42,974+ lose their jobs. Thats not counting the people Circuit city out source too……. We need them to stick around….retail jobs are no longer a dime a dozen…most retailers are cutting hours and staff….this looks ugly

  22. TVarmy says:

    My prediction: Citigroup buys them.

  23. Eric1285 says:

    Ugh, this is terrible. The Circuit City near me is WAY better than either of the Best Buys.

  24. CSUSam says:

    I knew it! I was the only thing holding the company out of complete failure!

  25. AaronHlios says:

    Today the stock market said that shares of Circuit City are worth 43 cents each. Or, put another way, the whole company (buildings, cars, equipment, fixtures) is worth only $72million. All 682 stores. At the end of the last quarter, the company had $92million in cash, and they lost $607million during the quarter.

    It doesn’t take an expert in math and business to figure out that they don’t have any money to buy inventory from manufacturers for Christmas. But, you say, they could get a loan. From who? Who is lending right now?

    If you work there, I recommend not spending another minute working, as you might get paid this week, but not next week. I do feel for you. Start looking for something else, like now.

    For consumers, don’t bother buying anything there, as you may not have a store to return things to for an exchange or a refund (that’s really funny).

  26. MitchV says:

    They should have Firedog install a new corporate strategy.

  27. Corporate_guy says:

    How could they survive? I would imagine every store that has been losing money is screwed. They have no money and cannot get credit. Therefore they can’t pay anyone.

  28. donovanr says:

    CC, BB and then Futureshop all going under would be a dream week for me.
    I wonder if they will push extended warranties during a going out of business sale?

  29. hegemonyhog says:

    So, the real question is whether or not I should go ahead and buy my Christmas gifts there with the no-interest financing on the presumption that Chase will honor the no-interest financing, or just skip it entirely?

  30. Davan says:

    People still buy technology in B&M retailers? Thats a new one to me…

    • Real Cheese Flavor says:

      I figured they were doomed a few months back when I heard that they shitcanned their top-performing salespeople in order to save money or something like that.

      @Davan: I can walk into a store and buy some random gadget and when I get home if it’s DOA or craps out a few days later, I can drive back to the store and usually can exchange it right then and there.

      If I bought the thing on the Internet, I’d have to pay to have it shipped, hope that the delivery driver will leave the thing at my apartment’s office if I’m not home when they try to deliver otherwise I’m heading to the depot after work.

      Then if it’s DOA, I have to call some 800 number, sit on hold for several minutes to get a return authorization, possibly have to pay to ship the item back, and then wait for them to receive it before they ship me another.

      That kind of hassle is just not worth it to me.

  31. No competition for BB means higher prices, poorer service etc at BB.

    Without a strong BB, what do you think will happen to NewEgg and the other dedicated online vendors?

    This is one big circle jerk.

    Not saying we all need to go panic buy sheeitt off the CC shelves…. but if we don’t start buying something from them we could up just paying more for everything we do buy in the future.

  32. 420greg says:

    I have not stepped a foot inside one since they fired all the good help instead of their crappy execs.

  33. Darkkeyboard says:

    I’m tempted to buy 1000 stocks, just to see if I could make any money. If not, I’m out what, 42 dollars? If They hit anything like 5 dollars a share, I’d make something like 4000 dollars profit.

  34. cbcowan says:

    Their only chance is that their suppliers (e.g. Sony, HP, Samsung, TimeWarner, Sprint…) keep them afloat in order to have the retail distribution to sell remaining inventory.

    That said – odds of CC being a going concern by 2009 = <10%

  35. blackmage439 says:

    While I hate to see competition disappear, which always precedes price hikes or monopolies (*cough* AT&T, Walmart, etc.), I am glad to see this awful company go under. Their demise is a product of their own greed and ignorance. Hey, Circuit City! Home Depot’s firing of all their skilled workers sure as hell didn’t work for them; what made you think it would work for your company?!

    Oh, and did I mention high prices, crappy selection, lazy staff who never man the registers, and unorganized stores?

    So long, Circuit City. I hardly shopped at thee.

  36. AlexandraCurvus says:

    but, but, what will happen to Fireslog??? That CRACK team of trained and experienced computer professionals!

  37. wiley14 says:

    So long CC! I never really ‘shopped’ at CC as opposed to purchase things. What I mean by that is, I did all the product research online. If I needed something right away (or just impatient) and the price was reasonable – I could put in an online order and by the time I got there, it was ready for pickup. Usually, I came out better at CC than BB in terms of price. I absolutely hate BB and avoid it at all costs.

    My 2c…

  38. jpdanzig says:

    Well, at least when they have their going-out-of-business sale, they will actually have an excuse for not putting their merchandise in any order a sentient human being can fathom…

  39. ModernTenshi04 says:

    I never had an issue with Circuit City, and actually bought movies from them for a while as my local store tended to have them cheaper on the day of release.

    Either way it won’t affect me if they go out of business. Should they do so soon, I’m definitely looking to pickup a small HDTV on clearance for my parents this Christmas.

  40. mariospants says:

    Questino: how does this hit all of those “The Source by Circuit City” stores in Canada that used to be Radio Shacks???

  41. AMetamorphosis says:

    My question is what will this do to CC credit card holders?
    I have a zero blance and a 5k limit.
    Chase is the issuer on the card.
    Will they close it and reduce my limit?
    Will they move me over to another branded card?
    ( Note I think I have a credit limit with Chase between 3 cards of about 18k )

    I’m just concerned of this lowering my FICO score.

  42. jonmason1977 says:

    Why don’t Best Buy buy them and instantly wipe out their competition in time for Christmas…

  43. waybaker says:

    It would be great if Microcenter or Frys could swoop in here, buy up the stores that are at or near profitable, convert them to match existing store layouts and rename them of course.

    They could save thousands of jobs, expand their presence in the market, and keep up some pressure on Best Buy as competition.

    Then Circuit City can just close up shop, close the remaining stores that didn’t get purchased (ala CompUSA) and everybody moves on.

  44. talonscar says:

    I was going to buy some shares of CC, because I was hopeful they’d recover.

    “Trading has halted for this security” – according to Schwab.

  45. HalbertCabatan says:

    I think CC is going down because the warehouse where I work (can’t say what company) we’re getting truckload after truckload of 52′ plasma TVs that are new, not refurbished like the other stuff that comes in. This is the first time I’ve seen NEW stuff come in and someone I worked with said that CC is going out of business and they’re unloading as much product as possible behind the scenes.

  46. AMetamorphosis says:

    .

  47. KeeganMonet says:

    They suck. Very bad customer service.

  48. Anonymous says:

    As a former customer of Circuit City, I cannot feel sorry for them. I stopped going to that store last year after they layed off their experienced salespeople and workers. They replaced them with unknowledgable people who knew nothing about the merchandise. I don’t fault the new people…but I do hold a huge grudge towards their upper management for the bonehead move they made. I would think that everyone one on the salesfloor now is only parttime with no benefits. That is what the upper management wanted. Now they will pay the price and go bankrupt. Good riddance.

  49. Anonymous says:

    I worked at CC for two years, and honestly, it was decent place to work. As for warranties, they’re not owned by CC, so as long as that third-party provider remains in business, they’ll be honored. Before you ever buy an extended warranty, though, consider what the odds are you’ll ever cash it in — some of them are awesome, some of them are lame.

  50. Anonymous says:

    Ever since the year 2000 with selling the bank they owned to Chase and pleasing Car Max with letting them be their own stock symbol everything has just been going down down down.