RICHMOND, Va. — Circuit City Stores Inc. plummeted to historic lows in trading Wednesday after Blockbuster Inc. withdrew its takeover bid, causing investors to question the consumer electronics retailer’s future.
Shares of the Richmond, Va.-based company fell 40 cents, or 15.7 percent, to $2.17 in afternoon trading Wednesday, after hitting a more than 17-year-low of $2.10 earlier in the day.
The company, which has lost 86 percent of its stock from its 52-week high of $15.33, says it will continue to review strategic alternatives, but said that doesn’t require Blockbuster’s presence.
Blockbuster pulled its bid to buy Circuit City on Tuesday night, citing market conditions. The Dallas-based movie-rental chain had proposed a more than $1 billion deal in April with the plans to create a 9,300-store chain to sell electronic gadgets and rent movies and games. Blockbuster shares rose 25 cents, or 10 percent, to $2.76 in afternoon trading.
Circuit City has seen only one profitable quarter since the second quarter of 2007 but continues to defend its multiyear turnaround plan despite some missteps and has asked shareholders for time necessary to leverage the company’s future.
“If you look at our largest competitor (Best Buy Co. Inc.), this is still a healthy business,” Chief Executive Philip Schoonover reiterated to reporters after its annual shareholder meeting late last month. “The market is within our control if we get the time.”
Despite the company’s confidence in its turnaround efforts, Circuit City’s board will look for any alternative that would enhance value or possibly speed up the turnaround process, spokesman Bill Cimino said Wednesday.
“Our focus has always been on what’s going to drive the most shareholder value,” Cimino said. The company has given no timetable for action.
But Mark J. Wattles, whose investment firm holds a 6.5 percent stake in Circuit City, said in late June that numerous firms were in the late stages of conducting due diligence and expected announcement of a possible sale within the next month.
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