Now that electronics superstore Circuit City has gone dark, pressure is building on Best Buy (BBY, Fortune 500). The strip mall staple, home of the Geek Squad and beloved destination for iPhone accessories, is in big trouble.
For starters, the entertainment software market is rapidly shrinking. Just as bad: price-slashing competitors such as Amazon (AMZN, Fortune 500), Wal-Mart (WMT, Fortune 500) and Costco (COST, Fortune 500) are angling for its market share. That's troubling news in a sector where customers are often differentiating based on price alone. Plus, the trend toward digital shopping doesn't bode well. The company's signature advantages -- good locations, brand recognition (complete with friendly, Polo-clad salespeople) -- aren't important factors to consumers shopping on their smartphones.
The company's founder, Richard Schulze, is said to be weighing a takeover bid. When a Minneapolis paper reported Schulze would bid for the company on December 13, the company's stock shot up 16%. But shares plunged after Schulze and Best Buy extended the deadline for an offer until February. It's far from certain that Best Buy will be taken private.
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