Circuit City will enter Chapter 11 bankruptcy protection by as early as the first quarter of 2009 – and is unlikely to recover – according to research analyst at KeyBanc Capital Markets, Bradley Thomas.Writing in his research note, he said: "We believe a Circuit City bankruptcy has become a question of when rather than if. We now expect bankruptcy in 2009, perhaps as early as the first quarter."
He warned, however, that the 'when' part of the assessment would be dictated by vendors, saying that should one vendor pull its products from Circuit City, others would likely follow, speeding up the likelihood of it filing for Chapter 11.
He added that: "We believe the likelihood that Circuit City can emerge from bankruptcy and its remaining number of stores post-bankruptcy are diminished by the weakening environment."
It isn't all bad news according to Thomas, though. Best Buy is likely to benefit from the demise, suggesting that the extra custom from ex-Circuit City customers would be large enough to stem the effects of falling prices and lower customer spend.
He added that Best Buy could see its shares rise by as much as 37 cents per share if Circuit City was forced to close 300 of its 700 stores. At the time of writing, shares in Best Buy were 27.13 cents a share vs 0.40 cents a share for Circuit City.
Source: StreetInsider
Advertisement
Related Stories
- Kodak files for Chapter 11, sues Samsung Jan 19th 2012 at 7:24AM
- Kodak to file for bankruptcy says WSJ Jan 6th 2012 at 6:04AM
- Is Best Buy failing in the US too? Jan 6th 2012 at 5:18AM
- Best Buy to leave UK this month Jan 5th 2012 at 4:08PM
- Best Buy announces closing down sale Nov 27th 2011 at 10:59PM
- Confirmed: All UK Best Buy stores to close Nov 7th 2011 at 12:48PM
- Best Buy closure imminent Nov 7th 2011 at 12:55AM
- Best Buy to retreat from UK? Oct 18th 2011 at 2:00PM
- Best Buy leaks suggest early October iPhone 5 preorders Sep 4th 2011 at 10:51PM
- Best Buy prepared for further losses May 11th 2011 at 11:53AM
Follow Follow this article if you would like to receive notifications of updates.
Add a new comment
You need to be logged in to post comments. If you do not have an account then please register.
Comments
0 comments
There are no comments yet, be the first to add one!