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Two Ways To Play: Short Circuit


Strengthen your portfolio in good times and bad.

The Wall Street Journal reports Circuit City (CC) announced results for its fiscal first quarter. Financial results continued to worsen for the second-largest electronic retailer in the U.S. but CEO Philip Schoonover said numerous measurements were improving and results may begin to show as soon as later this year.

For the first quarter, the company said net income fell $1.00 per share, above expectations of -$1.07 per share. Net sales fell 7.4% to $2.3 billion largely inline with forecasts of $2.37 billion. The company also added that sales for stores open more than a year fell 11% with a 12% decline in the U.S. offsetting 10.5% growth internationally. In addition the company suspended its dividend to preserve cash which fell 75% from the prior year's level.

Going forward, Circuit City expects sales to remain flat with same-store figures continuing to decline in the mid-single digits.

From the Bull Pen: Bulls can likely look elsewhere for long exposure. Wal-Mart (WMT) may be an option as it pulls back to the $55 level.

From the Bear Cave: Circuit City's story shows the difficulties retailers are facing. The easy trade may be over but Best Buy (BBY) might still be an option for a downside play.

Have a great night!
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