Tuesday, May 01, 2007

Follow Up To Circuit City's Q1 Earnings: Is There Potential For A Private Equity Play?


Once is short-sightedness, twice is incompetence, three times is sabotage.

Given the absolutely appalling performance that Circuit City has turned in since the turn of the century it's time to ask, are they doing this on purpose? And is the struggling retailer ready to be taken private?


Left to their own devices, the company is in the weeds. Could it be time for private equity to make a takeover bid, right-size the management team, do a top to bottom analysis of the entire company, and actually come up with a winning plan?


Seems like a good idea to me. The best and brightest minds in business don't tend to be in retail. At least, if they started there, they tend to move on. A wholesale leadership change and housecleaning is what it's going to take to put Circuit City back on it's feet because, frankly the current management team isn't up to the job.





On a related note, urged on by one of my correspondents, I have the following open-ended offer to make to Circuit City's Board of Directors.

Last year you gave Phil Schoonover US$6.95 million to ruin your company. I promise you that I can destroy Circuit City for less than half that. For a $2mm salary, and a $1mm bonus upon completion (salary up front, please, and put my bonus in an escrow account before the fat lady sings, if you would be so kind) and I can sail you onto the rocks before Christmas.

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1 comment:

Flatland Pastor said...

It has been my conviction for many, many years that no business endeavor can survive being run poorly longer than a retail entity. I am convinced that this is true because such businesses have a nearly inexhaustible supply of unwitting support in consumers who will patronize them in spite of all their shortcommings.

P.T. Barnum was right.