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Blockbuster's Twisted Logic


Bid for Circuit City defies reason.


Hello from New York where I'd love to pretend I see the hidden logic of the Circuit City (CC) takeover by Blockbuster (BBI) but, candidly, I'm at a loss. "Synergies" doesn't make a ton of sense. "Real Estate" is bizarre - CC is in the process of changing its store base and Blockbuster, until very recently, was trying to morph into not having stores at all. Add it all up and what's my best guess? The thinking at CC and BBI is "Let's hold hands and jump off the cliff together". In other news:

  • I'm not sure if it seems too obvious to expect more weakness into the heart of earnings season but I do know this: I don't like owning stocks into what I expect to be bad news unless we're at the tail end of a big sell-off. The S&P 500 going down 2.7% last week doesn't qualify.

  • I've had people asking me about buying the dip on Circuit City for weeks. Months, actually. Do I feel bad about missing today's rip? Not at all. CC has become a penny stock in terms of how it trades. All hope and guessing and, at the end of the day, no one actually makes any money.

  • $23.45 is your XLF (financial ETF) closing low, for those keeping track of whether or not the bottom is in at home. For the record, I'm a buyer at that level, if/when.

  • My wife had to put her horse, Mr. B, down this morning. I'm not a horse person but Mr. B was a good one; sweet, loved Mrs. Jeffmacke as much as I do and nice to my kids. Between that and the Guinea Pig, it's a period of animal mourning around the Macke household these days.
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No positions in stocks mentioned.

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