Parties Sniffing Around Circuit City's Firedog Tech Services
July 29 2009 - 8:35PM
Dow Jones News
Multiple parties are sniffing around the auction of trademarks
and other assets associated with Firedog, the tech-support business
of Circuit City Stores Inc. (CCTYQ) before the chain shut all of
its stores earlier this year.
"We are having dialogues with multiple parties," said Gabe
Fried, managing member of Streambank LLC, which was hired in April
to help sell some of the consumer-electronics retailer's
intellectual property assets.
The court handling Circuit City's bankruptcy case set an Aug. 11
deadline for bids ahead of the Aug. 18 auction. The sale is part of
Circuit City's liquidation of assets as it tries to pay back
creditors.
Firedog isn't an operating business now but was the No. 2
installation brand in the U.S., behind Best Buy Co.'s (BBY) Geek
Squad, serving 800,000 customers a year before it was shut down,
Streambank said. Many of the firm's service technicians were
contract workers, but assets include rights to brand-related Web
site addresses and toll-free telephone numbers, as well as business
plans and a transaction database.
Firedog probably received more marketing investment in recent
years than any other service brand besides Geek Squad, which could
make it an attractive opportunity for newcomers to the services
market, Fried said. "We're optimistic about what's going to
happen," he said.
Streambank was also involved in the May 11 auction that resulted
in Systemax Inc. (SYX) paying $14 million for Circuit City's Web
site and other e-commerce assets. Systemax, which sells consumer
electronics through its CompUSA and Tiger Direct brands, has been
operating the revamped Circuit City site since mid-June.
Fried wouldn't disclose any of the parties involved in talks,
but said Firedog assets could appeal to information-technology
services businesses expanding into the small-office and home-office
businesses, or to consumer-electronics retailers looking to get
into the services side. Companies that franchise other types of
home services but want to add tech support or installation are
among other types of potential bidders, he said.
"There are publicly traded companies, there are private
companies, and there are some foreign companies who operate sort of
a Firedog-like service in other countries who are looking at this
as well," he said.
Circuit City rolled out the Firedog brand in 2006 as it made a
fresh push into installation and services, and Firedog was one of
the retailer's few growing businesses as product sales
faltered.
Given the economy, many potential buyers have been "basically
sitting tight" up to now, Fried said, "which is why we set up the
auction deadline."
Still, he figures Firedog offered services that can remain in
demand in tough times. "If the installation business is off because
new product sales are down, you still can get a lot of revenue on
the support side because people are constantly looking for help"
with computers and other electronics, he said.
Best Buy's services business posted a 2% increase in same-store
sales during the May 30-ended quarter, even as companywide sales
fell 6.2% on a same-store basis.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com