Wednesday, July 02, 2008

Blockbuster Drops Circuit City Bid

You know you've made a bad move when your stock jumps 14 percent after you decide to pull out of a potential purchase.

That's exactly what happened today when Blockbuster formally dropped its buyout bid for Circuit City. Shares of the nation's largest brick-and-mortar video rental store jumped 14 percent on news that it would no longer pursue a partnership with Circuit City.

The deal never really made sense to me.

As we move ever-more-digital, it makes little sense for two businesses -- two completely different businesses -- that rely on foot traffic to try to merge. It makes more sense for Blockbuster and Netflix to look for a partnership -- or strangely enough, for Blockbuster and UPS to strike a deal.

Wait, UPS? Huh?

It turns out that UPS is more than just a package delivery service. They also go in and evaluate your internal structures, help you modify them and compete in a global marketplace by streamlining operations.

And they are really, really good at it.

With Blockbuster looking for a way to compete with Netflix, a partnership like this only makes sense. Not one with Circuit City.

Posted By Brad at 05:42 PM
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