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Scott Jagow: Speaking of Circuit City, Blockbuster wanted to buy it for a billion dollars. Now, it doesn’t. Here’s Amy Scott.

Amy Scott: A Blockbuster-Circuit City deal would have merged two companies that lost money last year. Blockbuster has been shedding business to the likes of Netflix and Wal-Mart.

Analyst Joe Feldman with Telsey Advisory Group says Circuit City has been ailing for years.
He says that’s thanks to poor retail locations, inferior service, and stiff competition from Best Buy and again, Wal-Mart. Blockbuster pulled the plug on its offer after a closer look at Circuit City’s books.

Joe Feldman: They had a pretty weak first quarter. They said the second quarter was gonna be even worse. They’ve stopped paying a dividend. You know, there’s a lot of risk involved with this name now.

Feldman says Blockbuster can still get in on the electronics game. They’ve got plenty of stores and can buy directly from manufacturers.

Circuit City may need some outside help. In a statement, the company says it’s still looking at “strategic alternatives.” That may include finding another buyer.

In New York, I’m Amy Scott for Marketplace.