BloggingStocks

Circuit City loses board member (and the patience of investors)

Steven Mallas — 2008-07-03T16:44:00+00:00

Filed under: Wal-Mart (WMT), Blockbuster Inc 'A' (BBI), Best Buy (BBY), Circuit City Stores (CC)

According to this Wall Street Journal (subscription required) piece, a member of the Circuit City Stores, Inc. (NYSE: CC) board has left the building. Lead outside director Mikael Salovaara resigned yesterday. Can you blame the guy?

No you can't. Circuit City doesn't have any sort of game plan at the moment, and it's sinking fast. The company's stock is priced at $2.31 as I write this. The goofy Blockbuster Inc. (NYSE: BBI) transaction is gone (for now, at least...there are reports saying that it could be resurrected at a later date, although I don't buy that it will happen at all). It isn't competing effectively against Best Buy Co., Inc. (NYSE: BBY) and Wal-Mart Stores, Inc. (NYSE: WMT). In short, Circuit City is a Titanic-like electronics retailer that doesn't know how to keep its ship from hitting icebergs.

So this resignation isn't surprising. Of course, is there any way to make money off the stock? I do believe there is downside to come on the share price, which would therefore imply that shorting it could work out. Alas, I wouldn't recommend it. You just know that some company and/or financial entity out there might come in at any point and make a bid, and the shares could skyrocket. Although the Blockbuster deal didn't make sense, it doesn't mean that there isn't some transaction scheme out there that would be logical. Circuit City is a stock merely to watch out of curiosity, it's not one to do anything about.

Disclosure: I don't own any company mentioned here; positions can change at any time.

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Blockbuster could come back for Circuit City?

Zac Bissonnette — 2008-07-03T10:22:00+00:00

Filed under: Deals, Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

Citing unnamed sources, The New York Post reports that Blockbuster (NYSE: BBI) could come back to Circuit City (NYSE: CC) to try to acquire the company.

The sources said that Circuit City pulled out because of weakness in the credit markets, but still feel that a deal could have strong long-term benefits. I don't think it makes sense for Blockbuster to acquire the company but, if it does, pulling out for now is probably a good idea. Shares of Circuit City tanked when Blockbuster announced that it was no longer pursuing a deal, and, according to the Post, Best Buy (NYSE: BBY) isn't interested because of antitrust concerns. With few indications that there is anyone else bidding for Circuit City, and the company's fundamentals in a rapid state of decline, it seems like the longer Blockbuster waits the less it will have to pay. Unless another bidder emerges, there's no real rush.

Back in April, Blockbuster made a preliminary proposal to acquire Circuit City "with an all cash offer in the range of $6.00 to $8.00 per share, subject to due diligence." With shares of Circuit City down 9% to $2.32 on Wednesday, Blockbuster could probably get the company for considerably less if it made another offer today.

With Circuit City bleeding cash, continued consumer weakness could make it really cheap on the courthouse steps later this year. Maybe then Blockbuster shareholders would be more supportive of a deal.

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Blockbuster-Circuit City deal was one of the silliest in memory

Zac Bissonnette — 2008-07-02T10:47:00+00:00

Filed under: Deals, Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

One of the silliest possible mergers in recent memory (no small accomplishment) is dead in the water now that Blockbuster (NYSE: BBI) has announced that it will no longer pursue its previously announced effort to acquire Circuit City (NYSE: CC).

In a press release issued yesterday afternoon, Jim Keyes, Blockbuster Chairman and CEO, said that "Based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster's shareholders to proceed with an acquisition of Circuit City."

Given the shares of Blockbuster tanked when the company announced its initial offer, the company's shares could be expected to trade up today.

For Circuit City, the situation is more grim. With its stock in the toilet, Blockbuster's offer represented one of the few exit strategies. Blockbuster's assertion that its "initial due diligence" was a factor in its decision to withdraw its offer indicates that the company's financial situation may be worse than it appears to outside shareholders.

In a press release offered in response, Philip J. Schoonover , chairman, president and chief executive officer of Circuit City, said that "Our exploration of strategic alternatives is intended to serve the interests of our shareholders by considering every possible alternative to enhance shareholder value. The board's review was not dependent on Blockbuster's participation."

But Blockbuster was the only suitor to emerge publicly so far and, now that it's lost interest, there's little reason to expect anyone else to emerge.

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Brand name stocks under $10 to beware of, market themes for 2008's second half - Today in Money 7/2

Allan Halprin — 2008-07-02T08:59:00+00:00

Filed under: Microsoft (MSFT), Yahoo! (YHOO), Starbucks (SBUX), Ford Motor (F), General Motors (GM), Motorola (MOT), Toyota Motor Corp. (TM), Netflix, Inc. (NFLX), Citigroup Inc. (C), Sprint Nextel Corp (S), Blockbuster Inc 'A' (BBI), Money and Finance Today, Bank of America (BAC), Circuit City Stores (CC), Palm Inc (PALM), UAL Corp (UAUA), Crocs Inc (CROX), Qwest Communications Intl (Q), Rite Aid Corp (RAD)

In the News:

· Car Sales Hit 10-Year Low as June Was Bleak Month; GM Dropped 18%, Toyota 21%

· Microsoft May Take Another Stab at Yahoo

· Starbucks to Close 600 Stores

· Blockbuster Ends Pursuit of Circuit City

· Bank of America Closes Countrywide Acquisition; More Misery Ahead for BofA?

· Citibank ATM Breach Reveals PIN Security Problems

· Deepening Cycle of Job Loss Seen Lasting Well Into 2009

· Netflix Stars in a Slow Economy

· Manhattan Real Estate Finally Starts to Soften

Brand-Name Stocks Uner $10: Buyer Beware
These well-known names in the bargain bin may look appealing, but experts advise laying off until their earnings picture is clear. Among the stocks to be weary of are Sprint Nextel, Motorola, Ford Motor, Qwest, Washington Mutual, Northwest Airlines, Del Monte, Rite Aid, Chico's, Crocs, United Airlines, Palm, Sealy, Blockbuster, Circuit City and Orbitz.
Brand-Name Stocks Under $10: Buyer Beware

How to Play the Market in the Second Half of 2008
Market pro Todd Harrison discusses the top 10 themes for the rest of the year.
Where we are and where we're going: 10 market themes - MarketWatch

Finding Safety in a Bear Market
Here are five ways to protect your portfolio.
Keeping Your Balance in a Scary Market - Kiplinger.com

Airports Cash in on Flight Delays
Your delayed flight is bad news for you and your airline, but it's money in the bank for the airports who are turning into multi-billion dollar shopping malls for stranded passengers.
Delayed flights mean big money for airport industry - CNNmoney

Meet the New King of Brand Names
The CEO of Fortune 500 newcomer Jarden Corp. is busy reviving old brands, but Wall Street has its doubts. Meet Martin Franklin who is snapping up undernourished brands and give them a shot in the arm. His company now markets more than 100 brands - among them Sunbeam, Oster, Rawlings, K2, Hoyle, Mr. Coffee, Crock Pot, and First Alert - and is the market leader in such retail categories as kitchen electronics, playing cards, tents, and grill-gas canisters.
The new king of brand names - FORTUNE

How to Protect Yourself If a Store Goes Bankrupt
When furniture seller Levitz closed last fall, its Web site informed customers that they might not receive ordered merchandise, that there would be no more returns or exchanges, and that some paid-for extended warranties would not be provided. With tough times forcing Levitz and other retailers-including Sharper Image, Linens 'n Things, and Lillian Vernon-to file for bankruptcy protection, it's wise for shoppers to take precautions. Here's how.
ConsumerReports.org - Protect yourself if a store goes bankrupt

How American is American Apparel?
CEO Dov Charney has Canadian passport, extraordinary business acumen and social grace of a subway flasher.
Minyanville - NEWS & VIEWS-How American is American Apparel?

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Blockbuster yanks Circuit City bid

Peter Cohan — 2008-07-02T08:33:00+00:00

Filed under: Deals, Blockbuster Inc 'A' (BBI), Best Buy (BBY), Circuit City Stores (CC)

Ever since Circuit City Stores (NYSE: CC) CEO Philip J. Schoonover sliced 3,400 sales people in March 2007 to save money, I have questioned the savvy of its management. That's because many of those fired sales people took their customers over to Best Buy (NYSE: BBY). As its stock lost 86% of its value, I was surprised that anyone would make a bid for it.

Yet Blockbuster (NYSE: BBI), the struggling video store chain, decided to buy. I don't know what got into Blockbuster's head to make it think that combining two struggling companies would make an agile competitor. The Richmond Times reports that it wanted to create a one-stop shop for movies, games, and electronic equipment. But that dream died when Blockbuster pulled its $1.3 billion offer after reviewing Circuit City's books.

Carl Icahn has said he would buy Circuit City. But it's losing money -- $164.8 million, or $1 a share, in its fiscal first quarter. This was $100 million more than its Q1 2007 loss. And Blockbuster's conclusion after a closer look at its financial statements does not bode well for Circuit City's future. Circuit City stock is down 7.8% in pre-market. Let's see whether any new bidders emerge.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Pre-market movers (BBI) (YHOO) (GM) (CC)

Douglas McIntyre — 2008-07-02T07:50:00+00:00

Filed under: Before the bell, Microsoft (MSFT), Yahoo! (YHOO), General Motors (GM), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

Apollo Group (NASDAQ:APOL) is up over 15% on strong profits.

Blockbuster (NASDAQ:BBI) is up over 10% on news it has dropped it bid for Circuit City (NYSE:CC).

Yahoo! (NASDAQ:YHOO) is up 6% on news of a possible new bid from Microsoft (NASDAQ:MSFT).

Circuit City is down over 10% due to Blockbuster walking away from a possible offer for the company.

GM (NYSE:GM) is off 5% on a brokerage downgrade.

Stocks may trade differently in the pre-market than they do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com

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Before the bell: Futures higher on SBUX, YHOO, ahead of inventory report

Melly Alazraki — 2008-07-02T07:46:00+00:00

Filed under: Before the bell, Earnings reports, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Starbucks (SBUX), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC), Economic data, Oil

U.S. stock futures were higher Wednesday morning, as Wall Street could try to having yet another positive session. While Starbucks news of store closing and reports Microsoft may still be interested in Yahoo helped lift sentiment, UnitedHealth already issued a warning this morning. Employment data is also on tap before the market opens.

U.S. stocks finally ended higher on Tuesday. Surprisingly, it was car sales that helped the mood on the Street as as June sales came in not as bad as expected. The Dow industrials ended 32 points higher, or 0.28%, the S&P 500 added 4 points, or 0.38%, and the Nasdaq Composite added 11 points, or 0.52%.

Today, investors will have the ADP June private sector employment figures to chew on ahead of the government's report tomorrow. The employment report is expected to be released at 8:15 a.m. EDT. Then, at 10 a.m., May factory orders are due out.

Also on the docket today is weekly crude inventories, usually released at 10:30 a.m. EDT. While oil came off highs Tuesday due to a slightly stronger dollar, it again rose above $141 a barrel Wednesday, due to persistent supply concerns that has analysts warning of higher prices yet. An IEA report saying supplies will remain tight and demand will likely grow despite higher prices helped push prices higher.

In corporate news, Blockbuster Inc. (NYSE: BBI) said Tuesday it is withdrawing its proposal to buy Cicuit City Stores Inc. (NYSE: CC). BBI shares are 13% higher in premarket trading, CC's 7.8% lower.

UnitedHealth Group (NYSE: UNH) cut its 2008 financial outlook as it felt the impact of changing business trends during the second quarter.

Meanwhile, The Wall Street Journal reported that Microsoft (NASDAQ: MSFT) turned to other media companies such as Time Warner (NYSE: TWX) to join forces in buying Yahoo! (NASDAQ: YHOO). Apparently, Microsoft want Yahoo's search business, but could do without its content portal business, which another company could pick up. YHOO shares are up nearly 5.5% in premarket trading.

Finally, Starbucks (NASDAQ: SBUX) said it plans to close 600 stores, or about 8.5% of its total stores. While the turnaround strategy still has to prove itself, SBUX stock has been trading over 6.6% in premarket action on the news.

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Best Buy Q2 profits expected to slip; Circuit City expected to widen loss

Trey Thoelcke — 2008-06-16T10:31:00+00:00

Filed under: Earnings reports, Forecasts, Blockbuster Inc 'A' (BBI), Best Buy (BBY), Circuit City Stores (CC)

Though the earnings season is winding down, consumer electronics retailers Best Buy Inc. (NYSE: BBY) and Circuit City Stores Inc. (NYSE: CC) are scheduled to report second-quarter results this week. Best Buy profits are expected to be lower, while Circuit City is expected to triple its loss.

Best Buy is expected by analysts surveyed by Thomson Financial to report second-quarter earnings of 36 cents per share, down 7.7% from the same period of last year. The company has provided positive surprises in three of the past four quarters -- by 29.2% in the fourth quarter of 2007.

Based in Richfield, Minn., Best Buy is the largest consumer electronics outlet in the U.S., with about 1,300 stores in the U.S. and Canada providing appliances, gadgets, movies and music, cell phones, and technical services. In the past year, the company's revenues were $40 billion and its net income totaled $1.4 billion. Its long-term EPS growth forecast is 15.3%, which is a little better than the retail industry average. The consensus recommendation of analysts shifted from buy to to hold Best Buy during this past quarter.

The stock is down 13.2% since the beginning of the year, but down only 4.7% from a year ago. It trades at a P/E ratio of 14.65. Shares closed Friday at $45.70.

Circuit City is expected to report second-quarter loss of $1.01 per share, compared to a loss of only 33 cents per share in the year-ago period. Despite a positive surprise in the first quarter, the company has tended to miss estimates recently; the loss was more than twice what analysts estimated in the fourth quarter of 2007.

Richmond, Va.-based Circuit City sells consumer electronics in 680 stores in the U.S. and online, and recently became a buyout target of Blockbuster Inc. (NYSE: BBI). In the past year, Circuit City's revenues were $11.7 billion and its net loss totaled $320 million. The company's long-range EPS growth forecast is 10.6%, less than that of rival Best Buy. The consensus recommendation of analysts remains to hold Circuit City.

The share price is up 3.6% since the beginning of the year, but has fallen 73.9% from a year ago. Shares closed Friday at $4.35.

Best Buy is scheduled to report earnings Tuesday morning, Circuit City on Thursday morning.

For more news that could influence the results, see BloggingStocks' Best Buy coverage and Circuit City coverage.

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Yahoo! (YHOO): Short sellers take position against Icahn

Douglas McIntyre — 2008-06-11T11:00:00+00:00

Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Motorola (MOT), Blockbuster Inc 'A' (BBI)

It would appear that Carl Icahn's attempt to take over Yahoo! (NASDAQ: YHOO) has a few less fans. Short sellers increased their interest in the company by 19.4 million shares to 66.6 million between May 15 and May 30.

The gamble is almost certainly based on the emerging sentiment that Icahn has made an awful decision. He will either lose his proxy fight to take control of the company, or win it and find that Microsoft (NASDAQ: MSFT) no longer wants to buy the company. Traders in general seem to like that theory. Yahoo! shares have moved from just shy of $27 five days ago to as low as $26.26 yesterday.

Icahn's biggest weakness may be that he has to be right. It has cost him a bundle in Motorola (NYSE: MOT) and Blockbuster (NYSE: BBI). Now, there is no indication that Microsoft will pay any premium at all for Yahoo!. Redmond may have no interest in any deal any more.

Some group of traders is guessing Yahoo! will trade much lower.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

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Wagons circle around Yahoo

Jonathan Berr — 2008-05-23T10:45:00+00:00

Filed under: Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

Yahoo! Inc. (NASDAQ: YHOO) Chief Executive Jerry Yang is bound to cry "uncle" sooner rather than later.

Pressure is mounting on the co-founder of the internet portal to do something -- anything -- to boost Yahoo's moribund share price. Billionaire activist investor Carl Icahn is leading a mutiny among shareholders disappointed that the company couldn't figure out a way to reach an agreement on a deal with Microsoft Corp. (NASDAQ: MSFT). Display advertising is coming under pressure as advertisers shift spending to search or demand steep rate cuts. Board member Edward Kozel today announced his resignation, another indication of management's growing isolation.

Yahoo management is clearly hunkering down. Today, comes word that the company is delaying its annual meeting from July 3 to the end of July. Is that enough time to reach an agreement with Microsoft or a search deal with Google Inc. (NASDAQ: GOOG)? Who knows? But you can bet that the meeting will not occur until there is some "good news" to report.

Meanwhile, Microsoft Chief Executive Steve Ballmer told a technology conference in Moscow that the Yahoo acquisition was not "strategic." Hmm, then why bother doing it? Clearly, Ballmer is posturing to get a better deal with Yahoo. Having Icahn on his side certainly helps.

As for Icahn's threatened proxy fight, the key word here is "threat." The last thing that Icahn wants to do is actually run a company. Operations just aren't his thing. But as he showed with Blockbuster Inc. (NYSE: BBI), Icahn is not afraid to wage proxy contests and win them. In Blockbuster's case, he trounced management. Whether that's a Pyrrhic victory remains to be seen. Shares of Blockbuster have tumbled more than 22% this year and investors are skeptical that buying Circuit City Stores Inc. (NASDAQ: CC) will boost the video-rental firm's lagging fortunes.

So,Yahoo shareholders should hope that Yahoo figures out a way to make Icahn and his allies happy before things get much worse.

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Earnings highlights: Wal-Mart, Macy's, Sony, Sprint, Sirius, Whole Foods and others

Trey Thoelcke — 2008-05-17T09:40:00+00:00

Filed under: Earnings reports, Wal-Mart (WMT), Home Depot (HD), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Sprint Nextel Corp (S), Sony Corp ADR (SNE), Penney (J.C.) (JCP), Blockbuster Inc 'A' (BBI), Whole Foods Market (WFMI), Tiffany and Co (TIF), Amer Intl Group (AIG), Lowe's Cos (LOW), Kohl's Corp (KSS), Electronic Arts (ERTS), Nordstrom, Inc (JWN), Liz Claiborne (LIZ), Nissan Motors (NSANY)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

AnnTaylor Stores Corp. (NYSE: ANN) sees Q1 profits beating estimates but reaffirmed the full-year outlook.
Blockbuster Inc. (NYSE: BBI) beat Q1 earnings expectations but fell short of revenue estimates.
Electronic Arts Inc. (NASDAQ: ERTS) posted strong Q4 and full-year results on titles such as Rock Band.
Fossil Inc. (NASDAQ: FOSL) forecast Q1 earnings just a penny below analysts' estimates.
IMAX Corp. (NASDAQ: IMAX) doubled its Q1 loss and missed Wall Street's expectations.
JC Penney Co. Inc. (NYSE: JCP) profits fell 50%, and it predicted trouble would continue through the year.
Kohl's Corp. (NYSE: KSS) posted a smaller-than-estimated Q1 profit decline and cut its full-year outlook.
Liz Claiborne Inc. (NYSE: LIZ) swung to a Q1 loss on restructuring but beat analysts' expectations.
Lumber Liquidators Inc. (NYSE: LL) posted strong Q1 results despite the housing slump.
Macy's (NYSE: M) beat low Q1 expectations despite weak same-store sales.
Nissan Motor Corp. (NASDAQ: NSANY) Q4 profit surged but it warned of lower profits this year.
Nordstrom Inc. (NYSE: JWN) posted smaller-than-estimated Q1 profit decline and cut its full-year outlook.
Priceline.com Inc. (NASDAQ: PCLN) beat Q1 expectations due to increased bookings.
Sirius Satellite Radio Inc. (NASDAQ: SIRI) posted a narrower Q1 loss in line with expectations.
Sony Corp. (NYSE: SNE) swung to a Q4 profit but fell short of Wall Street estimates.
Sprint Nextel Corp. (NYSE: S) beat low Q1 estimates as its loss widened on charges and lost subscribers.
Tiffany & Co. (NYSE: TIF) projected beating Q1 earnings forecasts and raised its dividend.
Wal-Mart Stores Inc. (NYSE: WMT) posted Q1 profits up on international growth and bargain shoppers.
Whole Foods Market Inc. (NASDAQ: WFMI) Q2 profits fell due to the Wild Oats acquistion.
XM Satellite Radio (NASDAQ: XMSR) reported a bigger-than-expected Q1 loss and a surge in subscribers.

Also, after AIG's (NYSE: AIG) dismal results, International Lease Finance Corp. wants to be spun off from its parent. Analysts see JC Penney, Kohl's and the rest of the retail sector rebounding in the latter half of the year. Jim Cramer ponders some suprising responses to so-so earnings reports, and looks ahead to Lowe's (NYSE: LOW) and Home Depot (NYSE: HD) as a sign for the housing sector.

Other upcoming results to watch for include Campbell Soup (NYSE: CPB), Autozone (NYSE: AZO), Hewlett-Packard (NYSE: HPQ), Intuit (NASDAQ: INTU), Staples (NASDAQ: SPLS), Target (NYSE: TGT), Limited Brands (NYSE: LTD) The Gap (NYSE: GPS) and Barnes & Noble (NYSE: BKS).

Visit AOL Money & Finance for more earnings coverage.

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Blockbuster's first quarter doesn't change my bearish thesis

Steven Mallas — 2008-05-16T10:00:00+00:00

Filed under: Earnings reports, Netflix, Inc. (NFLX), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

Blockbuster (NYSE: BBI) announced first-quarter earnings on Thursday, and while it beat the market's expectations, I can't say I'm terribly excited. Revenues decreased a little over 5% to $1.4 billion. Net income from continuing operations came in at $0.21 per diluted share. Briefing.com says that this performance was $0.06 better than Wall Street's average call. Revenues, however, missed expectations.

Why am I not excited about the performance here? I mean, not only did the bottom line trounce the wizards of Wall Street, but domestic comps increased 2.9%. Well, for one thing, the cash flow was nonexistent. Both operational and free cash-flow were negative; granted, the company used a lot less cash this time for operations, and the deficit in terms of free cash was much better, but still, I don't see any positive green.

Plus, there's just the general idea of Blockbuster itself. My feelings haven't changed since I last wrote about the movie-rental business and its earnings. I still believe that Netflix (NASDAQ: NFLX) and video-on-demand limit the upside potential of the company's long-term prospects (perhaps I shouldn't just say limit; maybe threaten is better terminology, who knows).

And then there's the issue of Circuit City (NYSE: CC). When management floats an idea like buying Circuit City, which I just don't believe is in the interest of Blockbuster and its shareholders since Blockbuster should just worry about getting its own house in order before worrying about eradicating the chaos from another house, I have to question the rationality of speculating on the business.

Yeah, I think I'll skip this three-dollar-stock for now. Too many problems going on with its fundamentals, too many disruptive shifts happening in the movie-distribution industry...

Disclosure: I don't own shares in any company mentioned in this article; positions can change at any time.

Before the bell: Futures higher as investors await data

Melly Alazraki — 2008-05-15T07:37:00+00:00

Filed under: Before the bell, Earnings reports, Deals, Microsoft (MSFT), Yahoo! (YHOO), General Electric (GE), Market matters, Penney (J.C.) (JCP), Blockbuster Inc 'A' (BBI), Kohl's Corp (KSS), Economic data, Nordstrom, Inc (JWN), Blackstone Group L.P (BX)

U.S. stock futures were marginally higher early Thursday morning as once again investors await data on the economy to give them direction. Several deals and earnings are also in the spot light this morning.

U.S. stocks received a boost Wednesday from lower-than expected inflation numbers, given extra credence by the fall in crude-oil prices. While most companies reporting earnings Wednesday didn't proved good news, a smaller-than-forecast loss for Freddie Mac helped lift sentiment. The Dow industrials rose 66 points, or 0.52%, the S&P 500 rose 6 points, or 0.40%, and the Nasdaq Composite edged up more than a point, or 0.06%.

This morning, more inflation data is due out. Consumer level inflation reported Wednesday managed to surprise the Street, but can the economic releases today do the same?
At 8:30 a.m., weekly initial jobless claims will be released, as well as May NY Empire State Index.
At 9:00 a.m., March Net Foreign Purchases will be reported to be followed some time later with April capacity utilization and industrial production.
At 10:00 a.m., after the market opens, the Philadelphia Fed index is due and is expected to show another decline.
Finally, a housing index is also due today.

Meanwhile, despite recent signs of a global slowdown, in Europe, economic growth accelerated more than forecast in the first quarter thanks to the strongest German expansion in 12 years. This data would seem to support the European Central Bank more hawkish stance and its decision to keep rates unchanged in an attempt to stall inflation, which Trichet, the ECB president, more than once mentioned as a global risk.

On the corporate side, The Wall Street Journal reported late Wednesday that General Electric (NYSE: GE) plans to sell its appliance division for between $5 billion and $8 billion

Meanwhile, billionaire activist investor Carl Icahn decided to try and overtake Yahoo Inc. (NASDAQ: YHOO)'s board, to at least scare it into action and revive negotiations with Microsoft Corp. (NASDAQ: MSFT). Icahn has lined up a slate of 10 directors to nominate as replacements.

Among companies reporting today are Blackstone Group (NYSE: BX), Blockbuster (NYSE: BBI) and several retailers: Nordstrom (NYSE: JWN), Kohl's Corp. (NYSE: KSS) and J.C. Penney (NYSE: JCP).

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The week in preview: Misery loves these companies (WFMI, SIRI, BBI and more)

Andrew Horowitz — 2008-05-11T12:10:00+00:00

Filed under: Earnings reports, Apple Inc (AAPL), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Netflix, Inc. (NFLX), Blockbuster Inc 'A' (BBI), Whole Foods Market (WFMI), Economic data, IndyMac Bancorp (IMB), Zoltek Co (ZOLT), Blackstone Group L.P (BX)

The earnings party of last week was full of fun and frolic. For the most part, if you followed my list of recommendations, you would have had your very own "Fiesta de Finance." (See Week in Preview - May 5)

The earnings season is still in full swing and should provide a great deal of action for the companies that will be reporting. But these companies will have to fight through a few new economic barriers. With oil pushing past historic levels and questions beginning to surface concerning the ability of the investor to continue to support a market that has so many headwinds, the mood is likely to shift moving forward. It is time for discipline, short and simple. Now, more than ever investors need a plan. I cover this strategy in my book, The Disciplined Investor.

In the last installment of The Week in Preview, I was looking for party opportunities in honor of Cinco de Mayo. This week, Misery is the theme. That is the only word that comes to mind with oil at a level that you would have never expected, a massive and unrelenting credit and housing crisis and a banking system that is defunct.

Monday - May 12

We start the week with a report from IndyMac Bancorp (NYSE: IMB). This bank is smack in the middle of the housing problem. It is primarily a lending company that facilitates loans for single-family homes. It's also involved in the origination and trading of mortgages. How does that sound to you as an investment? Shares have slid from $23 in October 2007 to an unbelievable level of $3.50 recently. Ouch... If you are a shareholder still holding on with hope and a prayer for something...anything, keep on dreaming. The good news is that the stock is sporting a yield of 29%. But, if you think that yield is going to be maintained, I have a bridge for sale. Estimates are for a loss of $1.92 per share for the quarter.

Sirius Satellite Radio (NASDAQ: SIRI) can finally show the world that satellite radio is the next big thing. With much of the confusion over the XM Satellite Radio (NASDAQ: XMSR) merger out of the way, we will now have the ability to see this company shine. Or not. The chart is in a clear downward trend, the fundamentals are appalling and the company is expected to post a loss of 7 cents for the quarter. But there is always next quarter I suppose.

Pacific Ethanol (NASDAQ: PEIX) has been feeling some pain of late. Between high corn prices, limited use of ethanol and unfavorable legislative actions, it has been an ugly ride for investors. Intuitively, you would think that alternative fuels, especially ethanol would have a great opportunity with oil over $120 per barrel. First Call shows analysts estimating a 9 cent per share loss for the period. It seems that revenue of $154 million is not enough to show profitability. Where does this stock go from here? Probably sideways for the time being.

Zoltek. Zoltek. Zoltek. (NASDAQ: ZOLT) This name is synonymous with aggravation and disappointment. In fact, in the investment dictionary, next to the word "horror-show" is this company's logo. It is not because of any particular problem other than the fact that shareholders are getting massacred. Interestingly, EPS growth has been reasonably good. Yet, slowing sales have caused shares to drop by 50% since January. Here is the kick: Institutional ownership is growing. In the last year the number of funds that own shares has doubled. What do they know that we don't? Revenue is expected to approach $50 million for the quarter with EPS estimated to be 22 cents.

Tuesday - May 13

The day starts with the release of monthly retail sales. Economists are expecting somewhere between 0-0.2% growth for April. This is a key number as all eyes are on the consumers.

It seems that eDiets (NASDAQ: DIET) has been taking the idea of dieting all the way to its share price. Shares are down an impressive 50 percent this year alone! You would have only thought that was possible with bariatric surgery. It is probable that the shedding of shareholder value will continue with this quarter's earnings release. The dieticians analysts are expecting additional earnings losses -- if that is even possible. First Call has put the quarterly loss estimate at 13 cents on $7.6 million of revenue.

Given Imaging (NASDAQ: GIVN) should be renamed: Taken Beating. The chart looks like one of those carnival slides that my kids love to ride. That ride is disgusting at best. What nerve they have making me sit on a filthy and torn potato sack. What do they take us for anyway? If you are the type that likes slides, go play with Given. Maybe you can even ask management to let you play with their wireless imaging systems for gastrointestinal tracks. HEY! Maybe we can introduce this technology to the eDiets team to help with their diet studies. For the patient investor, EPS growth looks to increase sometime in 2009. For now though, the quarterly loss is expected to be 4 cents on revenue of $27.27 million.

Rounding out the day's vomit-fest is Whole Foods (NASDAQ: WFMI). Here is another example of a company that should be renamed. You see, Half-Snacks shares have been rotting for the past two years, even in the face of several dividend increases and share buyback programs. The company's P/E is approaching 25 forward and earnings growth is expected to be 13%. This makes the PEG ratio a hot 1.92. As the robot in Lost in Space would say: "This does not compute." First Call estimates are for earnings of 30 cents per share on $1.892 billion of revenue. At least the food is good for you.

Wednesday - May 14

The Consumer Price Index has been showing massive gains when including all items. The effect of higher oil and food are trickling down to pockets and purses, causing the economy to slow. Economists believe that the Core-CPI will come in with a 0.2% monthly increase and CPI will be 0.3% higher.

Freddie Mac (NYSE: FRE) is planning on showing us how it fared in these tumultuous times. His darling bigger sister Fannie did a really nice job of evaporating a couple of billion dollars last week. You know what they say: "The family that lends together, offends together." Earnings losses are expected to approach 93 cents per share on $1.43 billion of revenue. Do you want to bet on that? Housing is the worst it has been in decades, the delinquency rate is abysmal, defaults are rising, bankruptcies are everywhere and Freddie is right in the middle of the action. Here is my vision: Freddie will miss earnings by a fair margin. Then, it will announce a $5 billion offering of preferred stock and tell us that this is the last time they will need capital and everything will be fine. Shareholders will rejoice and send the stock up, after first moving it down sharply. A day later, shares will be down again once investors wake from their concussions. Wait a minute -- didn't something like that happen with just last week with sissy-bear? (Click here for the real story on FNM and FRE.)

Want more? Can you feel the pain yet? It is like sliding down a razor blade naked into a pool of rubbing alcohol.
For the sick and twisted, take a crack at Salary.com (NASDAQ: SLRY) or maybe Rubio's (NASDAQ: RUBO). These are more examples of how not to invest. Then again, there is the annual need for tax write-offs I suppose.

Thursday - May 15

Initial Jobless claims for May are first up today. The major concern is that the continuing benefits number is increasing. This means that more people are losing jobs and not finding employment. So far, the good news is that unemployment levels are coming in below levels seen in previous recessions. Any spike will assuredly unnerve investors.

Isn't it time for downloadable movies yet? Blockbuster (NYSE:BBI) would have been the heir apparent for this, but NOOOOOOOOOOOO...Something is just not clicking here. Maybe it is the company policy of "no late fees" that really doesn't exist. Maybe it is the fact that Netflix (NASDAQ:NFLX) and Apple (NASDAQ:AAPL) are eating their popcorn. Maybe it is the very bad idea they had of acquiring Circuit City (NYSE:CC). Whatever the excuse, the earnings growth looks pitiful and the debt load this company is carrying is very concerning. We shall see if it can meet expectations of 14 cents per share on a whopping $1.443 billion of revenue.

Want to make a grown man cry? Tell him he owns 20,000 shares of Mesa Air (NASDAQ: MESA). Mesa is right! The is the story of being at the wrong place at the wrong time. Rising fuel costs along with a recessionary environment have pushed this company's shares down 75% since January. Say this with me: There is still hope... there is always hope. So, hope that it meets estimates of a loss approaching 5 cents per share and show revenues of $325 million.

Last on the list, and definitely least, is Thornburg Mortgage (NASDAQ:TMA). A true thorn in the side of any investor, this is a simple disaster. Shares have slid along with the housing meltdown and a near-term recovery is questionable. Analysts are looking for a $2.36 per share loss for the quarter on $90 million of revenue. You can derive a sense of insane comfort with the fact that management only owns 1% of the outstanding shares. Translated: Management doesn't even think there is a future here.

Friday - May 16

The Michigan Sentiment numbers are released at 10:00 am. Economists at Briefing.com are suggesting another drop to 62 from 69. This number has been deteriorating for the past months. Remember, in December it stood at 75.

After the close, Abercrombie (NYSE: ANF) is reporting quarterly earnings. How cool is that? AFTER THE CLOTHES...It is remarkable that with all of the headwinds and problems we are seeing within the economy, this stock has actually held up rather well. Blame it on the weak dollar, blame it on the fashion, blame it on luck. No matter, this should be an interesting quarter as most specialty retailers are having a very tough time making ends meet. Analysts are looking for 65 cents per share, the same as a year ago. Revenue is expected to rise to $809 million for the period. AFTER THE CLOTHES..HAH!

Disclosure: Horowitz & Company clients may hold positions of securities mentioned as of the publish date. Andrew Horowitz is a money manager and author of bestselling The Disciplined Investor - Essential Strategies for Success. Data provided by Briefing.com and other sources believed to be reliable. Dates may change without notice.

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Circuit City gets electric for shareholders

Tom Taulli — 2008-05-09T15:02:00+00:00

Filed under: Blockbuster Inc 'A' (BBI), Circuit City Stores (CC), Goldman Sachs Group (GS)

For the past year, Circuit City (NYSE: CC) has done a nice job short-circuiting its shareholders. But lately, there has been hope.

In fact, today the company essentially said it's "in play" for a sale. That is, it will allow Blockbuster (NYSE: BBI) - which has expressed buyout interest - to check out the books.

Although, it helped that billionaire activist investor, Carl Icahn, has been pushing for a deal. In a letter to Circuit City, he said he'll write a check to buy the company if Blockbuster can't come up with sufficient financing.

Yet, the question lingers: does a combination makes sense? After all, both Circuit City and Blockbuster are ailing. So why would a merger of two duds turn into a great entity? I seriously doubt it's something that frightens the folks at Best Buy (NYSE: BBY).

Then again, Circuit City may really be allowing itself to be sold to another player. For example, the company put an end to its proxy fight with Wattles Capital Management, which got three board seat. Oh, and Circuit City has retained Goldman Sachs (NYSE: GS) to explore strategic alternatives.

Thus, for the most part, Icahn is playing his typical role as the instigator. Keep in mind that he can be pretty tough to negotiate with - especially when you're selling your company to him.

And, so far in today's trading, Circuit City's shares are up 8%.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Battle of the Brands: Netflix vs. Blockbuster

Brandon Barker — 2008-05-08T17:00:00+00:00

Filed under: Competitive strategy, Netflix, Inc. (NFLX), Blockbuster Inc 'A' (BBI), Battle of the Brands

This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.

Way back when, the movie-rental wars were fought between the neighborhood video stores (which had limited availability) and the superchain Blockbuster (NYSE: BBI) (which had limited availability except for the Die Hard series). Then, Netflix (NASDAQ: NFLX) came along with an amazing business model. Set up an account online, build a mammoth list of movies (from tens of thousands available), receive a few in the mail and send them back when you're done -- no late fees, but you only got new movies when you sent old ones back.

At the time, Blockbuster -- and many consumers -- didn't think it would work. First of all, you had to wait a day or two to get new movies; and second of all, who was going to want to deal with sending movies back in the mail? I mean, gosh. Well, eventually, Blockbuster caved and started the same kind of service. When you compare the two, however, which one takes the cake?

What Netlix Offers: For $16.99, you receive three DVDs in the mail. These movies come from the top of the personliazed list you create on the Netflix site. Delivery times vary, but local distribution centers can usually get them to you in two days. You can keep these DVDs as long as you want; but, if you never return them you never get anything new. Which is a real bummer when I Am Legend is gathering dust on your TV set. After you've watched one, or more, send it back in the provided postage-paid envelope. Within a few days, your next movie arrives in the mail. As of now, Netflix offers a total of nine (9) membership plans, from one-at-a-time to eignt-at-a-time. You can also purchase DVDs through the site, in addition to watching certain movies for free.

What Blockbuster Offers: For $19.99, they have the same kind of three-at-a-time system (but nothing more than three). The main difference is that members have the option of returning movies at "participating" Blockbuster stores; however, they can only do this several times a month and after that there's a $1.99 rental charge. Some of their premium packages offer free unlimited in-store exchanges, but the late fee can be applied to these in-store rentals.

Who Wins? It depends on how you operate. If you're online savvy, keep your queue of films updated and don't mind the day-or-two wait, Netflix is tough to beat. But if you like the convenience of dropping by a local store and immediately exchanging it (like, say if you really don't like the movie you rented) then Blockbuster is your man.

B. Brandon Barker also writes for Political Machine.

Vote in our poll for Netflix or Blockbuster as your preferred brand, and let us know in the comments why you love it.

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HBK Investments is bullish on Blockbuster/Circuit City combo

Zac Bissonnette — 2008-05-03T16:10:00+00:00

Filed under: Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

As an investor, I wouldn't want to get any closer to Blockbuster's (NYSE: BBI) patently stupid effort to buy Circuit City (NYSE: CC) than I have to.

But HBK Investments -- which owns 9% of Circuit City, 8% of the class A stock of Blockbuster, and 5% of the company's class B stock -- has filed a 13-D on the matter, attaching a letter urging Circuit City to give Blockbuster access to the material it needs to perform due diligence. HBK added that if Blockbuster withdraws its offer because of a lack of cooperation by Circuit City's Board, "we believe Circuit City shareholders will be immediately and substantially damaged."

The fund also added that it might be able to provide financing for the deal, and expressed its confidence in the prospects for a combined company: "We believe that over $300 million per year in increased EBITDA could be realized following an acquisition by maximizing cost savings between Circuit City and Blockbuster."

That's a pretty impressive suggestion, and one that flies in the face of what many analysts have said about the proposed deal. But HBK didn't grow to around $14 billion in assets with stupid decisions, so maybe they're onto something.

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Blockbuster (BBI) wants part of new Viacom (VIA) pay channel

Douglas McIntyre — 2008-04-29T11:50:00+00:00

Filed under: Deals, Launches, Viacom (VIA), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

Blockbuster (NYSE: BBI) must want to own a piece of everything. First, it made a bid for Circuit City (NYSE: CC) and now it is trying to get a piece of the new pay TV channel being launched by Viacom (NYSE: VIA).

Viacom says it will start a TV network with movies and other video content with contributions from MGM and Lions Gate (NYSE: LGF). The channel will compete with HBO and Showtime.

According to The Wall Street Journal, "As part of a deal being discussed, Blockbuster would get digital rights to the new channel's programming in return for an investment in the partnership."

How that makes sense is a mystery. The Viacom channel can sell DVDs though a number of outlets. Streaming content over the internet does not require help from Blockbuster. How does a company with rental stores and a DVD-by-Internet operation help a pay TV channel which will be distributed by satellite and cable?

Blockbuster has problems of its own. For starters, it just needs to stay in business. Its stock trades at $2.98, near a 52-week low, and down from more than $20 less than five years ago. Putting capital into new ventures or nutty M&A transactions is a waste of shareholder money.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 Letter.

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Will video games help Blockbuster (BBI)?

Steven Mallas — 2008-04-29T11:11:00+00:00

Filed under: Microsoft (MSFT), Sony Corp ADR (SNE), Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

I'm not a huge fan of Blockbuster (NYSE: BBI), but I do concede that I think the movie renter is on to something with its latest move. According to this brief AP piece, Blockbuster wants to leverage the current video game console cycle to add value for its shareholders. Management intends to increase its presence in this sector by adding more hardware, software and accessories dedicated to consoles from Sony (NYSE: SNE), Microsoft (NASDAQ: MSFT) and Nintendo (OTC: NTDOY) to its locations.

This would be wise. I think all retailers should have a comprehensive and well-defined strategy when it comes to video games -- why let GameStop (NYSE: GME) have all the fun? Blockbuster should really go all out on this form of leisure entertainment and aggressively pursue this potential area of growth. Kids -- and teenagers and adults, for that matter -- love to try before they buy when it comes to game software.

Management has to realize, however, that it's not enough to just expand its video game sections; oh no. Indeed, some heavy branding and promotional initiatives are definitely required to convince consumers that Blockbuster is a go-to place for rental/buying needs related to PlayStation 3, Xbox 360, Wii and the Nintendo DS. I haven't thought of Blockbuster as a place to rent video games for a long time now (I also haven't thought about Blockbuster in general, since there aren't any close to me anymore).

So, yes, Blockbuster should do what it can to hitch onto the hot video game growth curve. This is a much, much better idea than buying Circuit City (NYSE: CC), I can tell you that. (For more on that debacle, check out Zac Bissonnette's recent post on the subject.)

Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.

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Blockbuster's bid for Circuit City faces skepticism

Zac Bissonnette — 2008-04-27T09:40:00+00:00

Filed under: Deals, Blockbuster Inc 'A' (BBI), Circuit City Stores (CC)

It's easy to understand why Blockbuster's (NYSE: BBI) out-of-nowhere bid for Circuit City (NYSE: CC) has been greeted with such skepticism: it's one of the most patently moronic business stories in recent months. And given the subprime mess, that's saying a lot.

The New York Times quotes a number of analysts, all of whom expressed substantial skepticism about the Circuit City deal. Most just don't see the point. Some worry that such a large deal will distract Blockbuster management from the task of restructuring its struggling core business.

Lehman Brothers analyst Douglas Anmuth has a creative take on it, pointing out that Netflix (NASDAQ: NFLX) could be the ultimate beneficiary of the deal: "The extensive use of both financial and management resources by Blockbuster throughout this process could be positive for Netflix as Netflix continues to focus on growing its subscriber base."

I'm not so sure about that, but I would look at it this way: how confident can Blockbuster be about its future as a stand-alone company if it's trying to pour its resources into such a bizarre acquisition?

Carl Icahn has said he is willing to step in as the financier of last resort if no one else will finance the deal, which seems like a good bet. Given the status of the credit markets, I can't see any bank rushing in to finance this universally maligned deal.

But questions remain about Icahn's offer. What are the terms? The publicly available details are vague.

Whether the deal will get done is anyone's guess. I'll leave Circuit City to the arbitrageurs, but I'd stay away from Blockbuster. This drunken-sailor grabbing the arm of another drunken sailor bid looks desperate -- and may indicate that Blockbuster's management is far less confident about its future with or without Circuit City than it's been letting on.

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