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Circuit City is throwing in the towel


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The electronics chain puts out the "For Sale" sign, hiring Goldman Sachs to assist on a deal, most likely with Blockbuster

Circuit City is finally throwing in the towel. Confronted with weak sales, impatient shareholders, and a U.S. consumer pummeled by recession, the electronics chain capitulated on May 9 and retained Goldman Sachs to help negotiate a deal. The same day, Circuit City Stores agreed to allow three board nominees from activist shareholder Mark Wattles to stand for elections.

The moves almost certainly presage a sale of the chain, likely to Blockbuster, where Carl Icahn has stepped up and agreed to finance a Circuit City acquisition. The billionaire—Blockbuster's largest shareholder—has bought into a "game-changing" scheme announced last month in which the troubled electronics retailer would be combined with the troubled movie retailer to create a new national chain selling consumer hardware and software.
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