What are they smoking over at Blockbuster ?
…because whatever it is, I want some.
Previously, we wrote about how Circuit City Stores, Inc. was basically, a dead company walking. We believe that the management of Circuit City irreparably damaged their company and their brand, by their really, really dumb decisions. Not only were they terrible choices from a business perspective, but they also proved that the company lacked a conscience and a soul. Circuit City sealed their own fate just over a year ago. We wrote that we would never again set foot in a Circuit City store, and that vow applies regardless of who buys the company, or what they might rename it. We think the American public feels the same way about Circuit City. They’re done.
It’s over for Circuit City. We’re as surprised as anyone that they are still in business today. If someone pays a nickel for the company, they’re paying about five cents too much. Besides, we think that buying Circuit City at this juncture, with the hope of turning it around, is akin to rearranging the deck chairs on the Titanic. Aside from being an incredibly stupid business decision, any company that tries to breathe new life into Circuit City is also being terribly inhumane. We think the best and most compassionate thing at this point would be euthanasia. We’ve already said our goodbyes and gotten over Circuit City.
As incredible as it seems, Blockbuster is actually talking $1 billion for Circuit City (see “Is Circuit City Up For Sale?”, Businessweek, April 8, 2008, and “Blockbuster Weighing Options To Fund Circuit City Bid”, Reuters, April 21, 2008). Reminds us of eBay’s $2.6 billion purchase of Skype. If I was a Blockbuster shareholder, I’d be running for the nearest exit right about now. About the only idea in the past 100 years more ill-conceived than Blockbuster’s interest in Circuit City, was Circuit City’s interest in DIVX. Consumers quickly drove a stake thru the heart of DIVX.
This whole thing reminds us of a comment that Sun Microsystems’ Scott McNealy once made about the then-proposed merger between Hewlett-Packard and Compaq… “It’s like two garbage trucks backing into each other in slow motion. (Beep, beep, beep…thunk)”. (see story at news.com)
If we may employ a railroad analogy, what we have here is the Circuit City Express. It’s heading down a steep grade, picking up steam, and the the bridge over Recession Gorge is dead ahead. Nobody involved seems to have noticed that the bridge has been washed out. The railroad did have experienced people who were familiar with the dangers on this route, but they were all replaced with employees who now earn just above minimum wage. Smart move. Inexperience notwithstanding, the bumpy ride over the last few miles should have tipped off the crew that something is very, very wrong.
On the one hand, you have Blockbuster, who thinks that this train is a good investment at $1.3 billion. On the other hand, you have the geniuses at Circuit City, who are scoffing at the paltry offer. Nobody seems to realize that what they are bickering over is an impending train wreck. Blockbuster is offering the passengers a way to get off the train, and the passengers are turning their noses up at the offer. It’s hard to tell whose judgment is worse. The employees that the railroad booted off the train a few miles back don’t realize how lucky they are.
Meanwhile, back in Dallas, Blockbuster CEO Jim Keyes is sitting in his office, reading a book about an optimistic locomotive, and keeps repeating to himself “I think I can… I think I can”. Perhaps Mr. Keyes should put down the book, and check to see if they have this DVD at Blockbuster.
It’s too late for this to be an April Fools joke, so we’re guessing that Blockbuster is actually serious.
With our sincerest apologies to the late Richard P. Feynman…
Surely you’re joking, Mr. Keyes !