The Digital Home

When Circuit City announced on Monday that it was closing 155 stores amid financial trouble, it didn't surprise me at all. If you've been following this page over the past year and a half, you know that I've been saying since the beginning that Circuit City doesn't have the chops to stick around and compete with Best Buy.

(Credit: Circuit City)

And although yesterday's announcement was probably a shock to some at the company, it shouldn't have been. For the past few years, Circuit City has been the victim of one of the steepest declines this industry has ever seen.

Right now, the stock is in danger of being delisted from the New York Stock Exchange, thanks to a share price that can't make its way above the $1 mark. In fact, even after announcing the closure of 155 stores, the company's shares rose only 10 cents in daytime trading, bringing its stock price to 36 cents per share.

We can't forget, upon analyzing Circuit City, that this isn't the end of store closures, nor the beginning of financial success. The company is now going to engage landlords in negotiations to "aggressively" reduce rental rates in stores nationwide.

Once that initiative fails--and it will--Circuit City will have no other option but to close even more stores as it tries to find the right balance between size and financial stability.

Much has been made about Apple's cash. The company, which operates with no debt in its financial structure, is one of the most financially sound organizations in tech, with $24.5 billion in cash on hand, even more cash than Microsoft.

But now that it has all that money, what should it do with it?

Some say Apple should simply hold on to the cash and be prepared for what could be a difficult few years, as the economy continues to feel the pressure of a credit crunch, while others think Apple should start spending while the targets are cheap and do what it can to expand its role in the industry.

I can't help but agree with those in the second camp. Why should Apple, one of the most profitable and powerful companies in the industry, sit on its hands while other companies with strong properties and technologies in their own right need to worry about the future? For the first time in recent memory, tech companies can be acquired for a relatively affordable price, and a company in the position that Apple is in needs to capitalize.

So what can it do? Quite a bit. Instead of spending all its time on cell phones, PMPs, and Macs, maybe Apple should try to become the company that offers products that tag along with you throughout the day. Or maybe Apple should get into the video game business and start solidifying its position in that market. Or maybe Apple should start putting real pressure on Microsoft and build an operating system that not even Ballmer & Co. can match.