Management blunders cause Circuit City stock to short out

Dear Mr. Berko: I bought 200 shares of Circuit City late last year at $28, and the stock just fell and fell and fell in price. I spent a lot of money on TVs and electronics there, and I thought it was such a great company that my wife and I decided to buy the stock. What's wrong with this company? Why has the stock price fallen so low? Should I sell my shares or should I buy more stock and lower my cost price?

W.T., Oklahoma City

Dear W.T.: In 2003 my daughter Hilary defended a trio of bozos who one evening tried to reduce the electronics inventory of a Circuit City store (CC-$9.05). Neither was successful, but her subsequent visits to that store resulted in the purchase of a large-screen TV and 200 shares of Circuit City stock at $4.50 per share. Hilary has a nose for things, which I wish I had. Two years later, CC was trading at $20, and in April of 2006 she sold her 200 shares at $30.50. When I asked Hilary why she sold CC, she said she thought their customer service was lacking and that it was more fun to shop at Wal-Mart, Costco or Best Buy. She also believes management, with whom she's crossed swords, "is a few atoms shy of a molecule.”

I couldn't agree more. These are the same people, who in May of 2006 canned 10 percent of their top salespeople because they were earning too much money. Can you imagine General Motors, Merrill Lynch, MetLife or Century 21 eliminating their top producers because they earn too much money?

Well, since that "cut 'em loose” edict of "Prince” Phillip Schoonover (chief executive officer, president and chairman) over a year ago, CC's revenues have been flat as a debit card.

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