Monday, November 10, 2008
Economy Circuit City Files Chapter 11
Posted by Grant Brissey on Mon, Nov 10, 2008 at 3:23 PM
Soon: fewer outlets for disposable technology.
Circuit City Stores Inc., the nation's second-biggest electronics retailer, filed for bankruptcy protection on Monday (Nov. 10) but plans to stay open for business as the busy holiday shopping season approaches.It filed under Chapter 11 of the bankruptcy code, which will allow it to hold off creditors and continue operations while it develops a reorganization plan.
The Richmond, Va.-based company has been struggling as nervous consumers spend less and credit has become tighter, and the retail industry overall is facing what's expected to be the weakest holiday season in decades.
Circuit City also said it would cut 700 more jobs, after announcing a week ago that it would close 20 percent of its stores and lay off thousands of workers.
Via Associated Press
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1
I guess the shitty extended warranty their drones would keep pushing did not apply to their continued existence. So, so, sad. Not.
Aren't these the guys that fired all their staff with more than two years on the job, so they could all be replaced by cheaper, ignorant dweebs? That was the beginning of the end. These guys, like Borders, deserve to die.
2
It's going to be a very grim Christmas.
Retail traditionally does 25% of its annual business in the month between Thanksgiving and Christmas.
3
And there goes the service economy everyone seems to be touting in the let's-chide-Golob thread that developed a bit ago. More bright ideas?
4
Big boxes. Promotes driving 20 miles to get a $500 consumer item that can be shipped and put on a UPS truck. Requires acres of asphalt. Embodiment of sprawl.
They will shrink the no. of stores andkeep the 1/3 that are most profitable.
A very rational adjustment of the capitalist economy.
Good riddance.
5
@3 How would the industrial sector be immune from a recession if less people are buying goods the industrial sector is producing?
6
I was watching MSNBC today and just after it was announced during a newscast that Circuit City was filing for bankruptcy, they ran an ad for Circuit City in the commercial break immediately afterward.
Idiots.
7
BA, immunity's not the point, it's just eyeing what to salvage, if anything, and to what end. The only good argument for doing some salvage work on the industrial end is to nationalize and retool toward the eventual infrastructure/clean energy boom, hanging onto some jobs in the process. Not saying it's an easy argument, but it seems to have some pragmatic merit.
9
Hmmm...I guess I can expect to hear from thousands of small investors who will now decide to buy their stock. It happens every single time there's a high profile bankruptcy.
10
Why can't the monkeys at circuit city get retrained into some kind of green industry? If the argument that industrial jobs are good because they don't require an elaborate esoteric skill set offers the opportunity to anyone, how is this any different than sector service jobs?
seriously the only differences between sector service employees and manufacturing sector employees are what they do on the clock and the improvement of skills depending on how long theyve been doing it. essentially the stock of people for both sectors are the same; human clay molded into what the job requires without extensive backround in the field.
11
Reality is that most people are waiting until the post-Thanksgiving rush, when the real deals come out.
If you can't get a 40" HDTV for $300 by President's Day sale time, somethings wrong with the market cycles.
Just wait, Vince.
12
Circuit City has been struggling for years. Even if our economy was where it was last year or two years ago, this one was a long time coming.
13
The comparisons I've read relating to service vs. industrial focus not on the labor force, but on the relatively greater ability of industrial to add substantial economic value all along the supply and distribution chain. Design, component subcontractors, assembly, marketing, dealers, repair, etc. etc. And then there's the relative economic value of light vs. heavy industry. It helps in thinking about what, if anything, to use public debt to keep afloat. Long-term return on investment, to put it crudely.
And OT, I understand American Express just filed papers to become a bank holding company, giving them access to our public debt to keep themselves afloat. Anybody think that will end well?
16
the problem is one of cost though. each step along the way you're adding value But added value costs money if you're paying someone and financing capital along the way. theres no way you can economically prevent technology or foreign labor markets and manufacturing industries from beating value for cost of a fairly established and mature domestic manufacturing industry. the price of subsidizing a flagging and failing industry to sustain added value is questionable. Theres also the question of where the resources for such industry come from. There is less tolerance for the externalities of heavy industrial production within the united states than ever before. When the worker was king you had lake eerie catching on fire. Think about that. What do people value more at this point in time? the value added by having a chain of production domestically or the value of a chain of production overseas with finished goods sold domestic?
17
Yeah, I still only marginally like the idea only if it really is a nationalization followed by a retooling for new finished goods not yet in production overseas. Remember, GM is toast with or without Treasury infusions. So we're not talking at all about subsidizing more of the same, with GM retaining control over its balance sheet. Environmentalism's done a decent job of showing there's no determinative negative impact on profitability related to regulations enforcing clean technology in manufacturing, so that's workable-er now.
And it is charming to remember the value the U.S. once could find in a chain of production overseas with finished goods purchased domestically, but the problem with that now is, purchased with what money? The circle is broken, those days are over, which is why China is shitting giant bricks at the moment with no buyers to fall back on other than us, and politically charged things like protectionist tariffs may start popping up soon.
18
What will become of all the big box commercial real estate after credit/materialism?
In door paintball arenas?
20
Zander, what will become of the millions of square feet set to be vacated and not refilled is: the empty big boxes lead to empty smaller boxes that grew up around them in the malls, which lead to empty coffers for the mall owners, which lead banks to reluctantly seize the malls they financed, which lead to those same and other banks being hit by defaults on all the loans that financed the defunct big and small boxes, lead to bank after bank facing insolvency, lead to nobody buying these assets, leading to a steep depreciation of an awful lot of asset values on an awful lot of balance sheets. Which leads to a hell of a lot more people needing low income housing.
21
Bellevue's Wizkids shut down today too (maker of the Heroclix game)...
http://www.wizkidsgames.com/wk_article.asp?cid=41914
22
Circuit City is history? I guess from now on I'll have to do most of my Christmas shopping at Silo.
23
To those folks that lost their jobs at Circuit City...Time to hit the employment sites!
www.linkedin.com (professional networking)
www.indeed.com (aggregated listings)
www.realmatch.com (matches jobs based on your skills)
Good luck!
25
I'm partly to blame. Instead of tossing my 5 year old, slow computer (winXP). I installed Ubuntu Linux on my computer. The speed doubled, it never crashes and it does silly things like have the windows burn down when you close them. No hardware upgrade at all. Do your planet a favor (but not circuit city), keep your old computer forever! (well, maybe just a lot longer)
Thank you.
27
Chapter 11 does not mean they're closing up shop. (I realize most people know this, but given many of the comments here I figured it needed to be said...).
28
You be the judge of how long Circuit City is likely to keep its doors open: court filings indicate a group of electronics vendors and banks among Circuit City's creditors -- owed almost a billion altogether with inventory sitting flat on CC shelves -- have extended CC liquidity of a little over a billion to float them through Xmas, with the agreement CC uses the holidays to slash prices in order to liquidate inventory. Funny part is, this will really hurt CC's competitors' ability to get through the holidays too, and the vendors and banks to which the competitors owe money is largely the same group. In this light, those creditors' actions toward CC at this point may perhaps be read as freaking out panic to cut their losses with CC and all its competitors, the whole bunch of them.
Or maybe magic rainbows will keep them all open long past Inauguration Day. I dunno.
29
Electronics is pretty much synonymous with disposable technology, and Circuit City didn't invent the concept. Are you reading the Slog on your big-screen TV?
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