The WSJ's Infomercial for Circuit City

12 Feb 4:26am
Posted by ToddSullivan
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What is god's name is going on at The Journal? I just finished reading an "interview" with Circuit City's (CC) CEO Philip Schoonover that was, sad. It reads like it was a press release from the company.

Let's just put aside Schoonover's destruction of 80% of the companies value in under two years. First things first, here is the "interview".

This could only have been a "email me the questions and I will send you answers". There was no follow-up. It was a series of questions with wholly accepted answers. They actually went as far as to print this:



Now, am I the only one who notices that when Schoonover took over the company's stock price was at a near decade high? The year prior to Schoonover taking over the company made 31 cents a share and this year losses ought to exceed $2 a share. How is he engineering a turnaround?

Why is he even being spoken to about this subject? Can anyone anywhere show me any evidence of ANY turnaround?

Even in his "5 Tips" above, current actions totally contradict them.

Was Schoonover "listening to employees" (Rule #1) when he fired thousands of high priced but experience ones? The very employees it should be noted they are begging to return due to the precipitous drop in customer satisfaction in the stores?

Circuit City recently approved cash retention bonuses for current executives when it became apparent the current bonus plan was worthless due to the plummet in the stock price. Maybe that would have to perfect time to "refresh management" (Tip #2) and save shareholders several million dollars?

Rule #3, "Embrace Your Heritage" seems more than a little bit the polar opposite of the new "The City" concept being rolled out currently which is simply a reinvention of Radioshack's (RSH) wheel.

Rule #4, "Protect the Future" actually made me chuckle because at the rate Schoonover is going, the only thing in the company's "future" is a Chapter 11 filing. The guy does make me laugh.

I will give Schoonover credit for following Rule #5, "Stay the course". I have seen no evidence that Circuit City has any chance rebounding from its current downward spiral.


Disclosure ("none" means no position): Pity for shareholders (those who are left)

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About

ToddSullivan

A Massachusetts based value investor, I look for companies whose current valuation is at a discount to their true value. When I purchase a stock, my typical holding period is several years. I consider buying a stock purchasing a piece of a business. I am confident once I make a decision to buy that eventually the market as a whole will recognize the true value of the business and value it accordingly. It may take 1 month, 6 months or a year, but if I buy it at enough of a discount to its true value my results will be (and have been) superior to the market as a whole. Of all the disparate investing disciplines, value investing has stood the test of time. The great investors of have all been value investors. Warren Buffett, Ben Graham, Bill Ruane (Sequoia Fund), Bill Miller and Wally Weitz, all have consistently outperformed the market for decades by using various forms of value investing. Currently I am a contributing writer to Seeking Alpha, Vinvesting.com, The Stock Masters and Value Investing News. Posts have been reprinted in The Wall St. Journal, Yahoo Finance, Google Alerts, Google Finance, TheStreet.com. 24/7 Wall St. and Topix.net.

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