A Blockbuster Bid, a Wachovia Reckoning
Blockbuster offers up to $1.35 billion for Circuit City. Wachovia surprises the markets by posting a $393 million loss. And an acrimonious divorce uncovers a shaky business model at the ultra-exclusive Yellowstone Club.
NEWS AT A GLANCE
Blockbuster makes a play for Circuit City
Blockbuster, the largest movie renter, made an unsolicited bid for No. 2 U.S. consumer electronics retailer Circuit City, offering $6 to $8 a share in cash. Circuit City shares closed at $3.90 on Friday. Blockbuster said it made its initial offer Feb. 17, in a letter to Circuit City CEO Philip Schoonover, and that it was taking its offer public to give Circuit City shareholders a chance to weigh in. (Reuters) The deal was worth up to $1.35 billion, and would create an $18 billion retail giant. Still, "it's an odd move," said analyst Nick Bubb at Pali International in London. "Synergies between a video store and an electronics store aren't that obvious." (Bloomberg)
Wachovia posts surprise loss
Wachovia, the No. 4 U.S. bank, reported an unexpected quarterly loss of $393 million and said it is cutting its quarterly dividend by 41 percent, to 37.5 cents per share. (Reuters) Excluding merger-related expenses, Wachovia lost 14 cents a share; analysts had expected it to earn 40 cents a share. (AP in Yahoo! Finance) Wachovia said it will raise about $7 billion through selling new shares to replenish its capital. The bank had been expected to report earnings at the end of this week. Wachovia bought Golden West Financial, which specialized in adjustable-rate mortgages, at the height of the housing market. (Bloomberg)
Philips profit falls 75 percent
Royal Philips Electronics, Europe's largest consumer electronics firm, reported a 75 percent drop in quarterly profits, to $344 million. The larger-than-expected decline was attributed to disappointing sales of TV sets, but year-ago profits were also inflated from the sale of a semiconductor unit. (Bloomberg) Philips said last week it was quitting its unprofitable TV production for the U.S. and Canadian markets, instead licensing its brand there to Japan's Funai. "In the short term, the TV business continues to be more negative than expected," said analysts at Dutch brokerage SNS Securities, but new measures should "positively impact results from the end of 2008." (MarketWatch)
Trouble in a winter wonderland
The Yellowstone Club in Montana is a private ski resort for the ultra wealthy. But a messy divorce between billionaire founders Tim and Edra Blixseth, and a lawsuit by investors led by cycling legend Greg LeMond, have shed light on a faltering attempt to take the brand worldwide. Tim Blixseth borrowed $209 million from the club to buy potential resort properties around the world, but reportedly failed to sell the Montana resort for $455 million last month, as some creditors went unpaid. Halogen Guides analyst Jamie Cheng says Blixseth's global expansion plan is an ill-fated "vanity play," as billionaires would rather just buy a castle rather than join a club that owns one. (AP in USA Today)
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