Circuit City Shares Take a Hit After Blockbuster Backs Away From Deal Bizworld
RICHMOND | Circuit City Stores Inc. plummeted to historic lows in trading Wednesday after Blockbuster Inc. withdrew its takeover bid, causing investors to question the consumer electronics retailer’s future.
Shares of the Richmond-based company fell 23 cents, or 9 percent, to close at $2.32 in trading on Wednesday, after hitting a more than 17-year-low of $2.10 earlier in the day.
The company, which has seen its shares fall 86 percent from its 52-week high of $15.33, says it will continue to review strategic alternatives, but said that doesn’t require Blockbuster’s presence. Blockbuster pulled its bid to buy Circuit City on Tuesday night, citing market conditions. The Dallas-based movie-rental chain had proposed a more than $1 billion deal in April with the plans to create a 9,300-store chain to sell electronic gadgets and rent movies and games. Blockbuster shares rose 14 cents, or 5.6 percent, to close at $2.65.
Circuit City has seen one profitable quarter since the second quarter of 2007 but continues to defend its multiyear turnaround plan despite some missteps and has asked shareholders for the time necessary to leverage the company’s future.
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Weather Channel sale may be near
NEW YORK | The Weather Channel’s sale to a group made up of NBC Universal, Blackstone Group LP and Bain Capital could be announced within two days, sources told Reuters news service.
The Weather Channel is owned by privately held Landmark Communications, the parent company of The Virginian-Pilot. The price on the cable network is expected to be between $3 billion and $3.5 billion, sources told Reuters.
The original asking price was around $5 billion, sources have said. The Weather Channel has about 96 million subscribers in the United States and is seen in more than 97 percent of homes with cable TV.
– John Warren
Pace of factory orders slows
WASHINGTON | Orders to U.S. factories turned in the slowest performance in three months in May as a surge in demand for commercial aircraft was not enough to offset weakness in autos, heavy machinery and steel.
Factory orders rose by 0.6 percent in May, less than half the gains turned in during April and March, the Commerce Department reported Wednesday.
It was the poorest showing since factory orders had fallen by 0.4 percent in February.
Federal systems put IDs at risk
WASHINGTON | The government doesn’t have to look very far to see who’s ignoring its advice on preventing identity theft. It’s the government itself. The nation’s Medicare agency and the Pentagon want at least 52 million Americans to carry their Social Security numbers in their wallets, contrary to warnings by the Federal Trade Commission that people should avoid doing so.
At least 44 million Medicare insurance cards include the beneficiary’s full Social Security number. The number also appears on 8 million Defense Department identity cards used by active duty and reserve forces and their dependents. The Pentagon, however, plans to remove the numbers but won’t complete the effort until 2014.
The Internal Revenue Service still tells taxpayers to write their Social Security number on checks used to make payments, a potential problem for those using the mail rather than filing electronically. The IRS has no plans to change the system.
American Airlines to cut 8% of jobs
American Airlines expects to cut nearly 7,000 employees by the end of the year, or about 8 percent of its work force, as it reduces flights and grounds aircraft because of high fuel costs, the airline told employees Wednesday.
American said in a regulatory filing it expected to record a second-quarter charge of as much as $1.3 billion to account for the layoffs and to write down the value of the MD-80 and Embraer 135 regional jets it is retiring as it eliminates flights.
Analyst: GM could face bankruptcy
General Motors Corp. shares fell to their lowest level since 1954 after a Merrill Lynch & Co. analyst said the automaker might need to raise as much as $15 billion and faced the possibility of bankruptcy. The “dramatic drop-off” in the U.S. sales market probably will continue through 2009, forcing GM to find additional funding, analyst John Murphy, who lowered the shares to “underperform” from “buy,” said in a report.
GM dropped $1.77, or 15 percent, to $9.98.
Kroger expands its beef recall
The Kroger Co. on Wednesday expanded its voluntary recall of some ground beef products to its stores in more than 20 states, saying the meat might be contaminated with E. coli.
The nation’s biggest traditional grocer also urged customers to check the ground beef in their refrigerators and freezers to determine whether it is covered by the recall.
The recall involves ground beef in Styrofoam tray packages wrapped in clear cellophane or purchased from an in-store service counter. Kroger stores in Virginia have sell-by dates from May 19 to June 6 on the affected packages.
Mining Co. appeals to Supreme Court
CHARLESTON, W.Va. | Harman Mining Co. and its president Hugh Caperton filed an appeal Wednesday with the U.S. Supreme Court over a $76.3 million judgment favoring Richmond-based Massey Energy Co. in a coal contract dispute.
The appeal asks the U.S. Supreme Court to consider whether a justice on West Virginia’s Supreme Court should have disqualified himself from hearing Massey’s appeal of a jury verdict favoring Harman in the dispute.
The West Virginia justice, Brent Benjamin, rejected requests that he step aside because of conflict of interest and voted twice with the majority to overturn the original judgment in favor of Harman. Massey chief executive Don Blankenship spent an estimated $3.5 million to help Benjamin win his seat on the court in 2004.
– From staff and wire reports
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