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Struggling Circuit City losing spot on S&P 500: Henrico-based retailer to be replaced on index by a Philip Morris company
(Richmond Times-Dispatch (VA) (KRT) Via Thomson Dialog NewsEdge) Mar. 22--Circuit City Stores Inc. will lose its place on the Standard & Poor's 500 index because it failed to meet consistent profit criteria, index officials say.
It will be replaced March 28 with Philip Morris International Inc., the international sister company of Henrico County-based Philip Morris USA. On Friday, their parent company, Altria Group Inc., will spin off its foreign subsidiary.
Shareholders of Altria will get one share of Philip Morris International for each share of Altria they hold. Altria already is on the S&P 500.
Inclusion in or exclusion from the index does not directly affect shareholders. But the S&P index contains 500 large companies in leading U.S. industries, so bragging rights are involved.
Because of the prestige associated with being on the list, Philip Morris International could see a jump in its stock price while Circuit City could see its stock value drop.
S&P 500 companies must have four consecutive quarters of profit. Circuit City began its slide in the third quarter of 2006, when it announced a $16 million loss. It lost $207 million during the third fiscal quarter of 2007. The quarter ended Nov. 30.
"We respect, but are disappointed with, the decision by Standard & Poor's," the Henrico County-based electronics retailer said in a statement.
Circuit City's removal from the list comes as it counters criticism from major shareholder Wattles Capital Management LLC and President Mark Wattles.
Wattles, who owns 6.5 percent of the retailer, has asked that its board, which includes Chief Executive Philip J. Schoonover, be replaced at the annual shareholder's meeting in June.
Circuit City's 52-week closing high happened March 28, 2007, exactly a year before it is to be taken off the S&P list. The stock traded at $19.60 then.
It closed Thursday at $4.38, up 38 cents. Markets were closed yesterday in observance of Good Friday.
Contact Louis Llovio at (804) 649-6348 or LLLovio@timesdispatch.com.
To see more of the Richmond Times-Dispatch, or to subscribe to the newspaper, go to http://www.timesdispatch.com.
Copyright (c) 2008, Richmond Times-Dispatch, Va.
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