Activist investor says Circuit City could be sold in two months

If Circuit City gets sold anytime soon, it probably won't be to its chief suitor, Blockbuster, according to one of the electronics chain's most vocal investors.

In an interview with TWICE magazine Friday, Jim Wattles, owner of Wattles Capital Management, which owns 6.5 percent of Circuit City shares, said a sale could happen in the next two months. Wattles also said that Blockbuster, which bid roughly $1 billion for Circuit, isn't the only interested party, and in fact, the likely future buyer will be a private equity firm.

So, essentially, the company has options. It was revealed Friday morning that it has retained Goldman Sachs to look at other opportunities for acquisition besides Blockbuster. And another famously vocal shareholder, Carl Icahn, let it be known that if Blockbuster can't make good on its bid, he's interested.

Wattles comments to the magazine come a few weeks after Blockbuster's bid became public and he sent a letter to the retailer's chairman encouraging him to allow Blockbuster to at least kick the tires. Circuit City was, at the time, resisting allowing Blockbuster a look at its books, necessary to make a complete acquisition offer.

Not that he's soured on Blockbuster. On the contrary, he praised Blockbuster's hiring practices and employee training.

He's probably the only one. Sure, investors are unhappy, but the combination of two different retail companies with different cultures, products, and business models, is a disaster waiting to happen. In concept, it's great: selling hardware and content together. In execution? It's unclear how this could ever work.

Apple's iPod and iTunes combination is a tantalizing example of the possibilities a tie-up like this could represent. So is Amazon.com, with its Kindle e-book reader and e-books. But the difference, according to consumer electronics and retail analyst Stephen Baker, of the NPD Group, is that both of those occurred organically.

"Amazon and Apple did everything natively. It was an extension of what they were already doing," he said. "This is bolting pieces on."

[AppleSuxLeo]

Fire-Dog sale at CircuitBuster !!! LOL

[AppleSuxLeo]

FireDog sale at CircuitBuster !!! Bwahahahaha !

[1kingsfan]

Personally I think this is a good idea. If Circuit City can get a private investor rather than some bogus company that's already ALSO hurting for cash they can then go ahead and fire their stupid CEO Phil Schoonover and start back on the right track. I've always liked Circuit City over Best Buy anyhow!!!

[delf76]

I want to see circuit City survive. I like Both Best Buy and Circuit City because one store often carries things that the other store doesn't. I actually like Circuit City, as I find they have some good deals. Plus, I make them beat Best Buy's prices a lot because there is one right across the street from Best Buy :)

[GrandpaN1947]

I think it's wonderful that the company that tried to bring us the death of the DVD is being sold. Hopefully the next owner will be better for consumers.

[Stating]

Why do they keep blaring Rap music?

Why is it that Circuit City stores keep blaring Rap music when at least half their customer base is over 30? Sure, it's what the store clerks want to hear, but god, what about the customers? Stupidity this stupid must be destroyed!

[1kingsfan]

Most of these comments here have no basis in fact. If you were to tell me the customer service was terrible I might believe it...though my Circuit City has the best customer service around...but rap music? death of dvds? Clearly we should be taking YOU out of the gene pool! What kind of insane argument is that?

[benjaminstraight]

Circuit City won't sell. Come now.