A Fool Looks Back

Make it a Blockbuster flight
As its investors sighed with relief, Blockbuster (NYSE: BBI) decided not to make a play for struggling consumer electronics superstore chain Circuit City (NYSE: CC) after all.

The move doesn't scuttle Blockbuster's plans to diversify away from its DVD-renting stronghold, though. The optical disc is unlikely to most movie-watchers' format of choice in a few years. Why else would Netflix (Nasdaq: NFLX) be so aggressive in moving toward online streaming if CEO Reed Hastings didn't see more than a few years left in the DVD lifeline?

Blockbuster has the luxury of transforming its stores into broader entertainment outlets. Acquiring Circuit City would have given Blockbuster a recognized brand to move everything from home-theater installations to flick-streaming laptops.

The company certainly does not need Circuit City to do that, though it would have helped Blockbuster get up to speed quickly. Unfortunately, Circuit City's struggles as a retailer may have created the opportunity to buy a big brand at a small price, but it also attached turnaround risks to the potential purchase.

Briefly in the news
Now let's take a quick look at some of the other stories that shaped our week:

• RealNetworks (Nasdaq: RNWK) became the latest digital music company to throw its weight behind the MP3 movement. The company behind the Rhapsody music subscription service announced that it would begin selling freely portable tracks in the popular MP3 format, free of digital rights management locks. It's the right move, but it's also a dive into a deep pool of competitors.
• Cool beans? Not so, if you're Starbucks (Nasdaq: SBUX). The java giant announced that it would be closing 600 stores and trimming its workforce by 7%. It's a caffeinated blow to the company, but a sobering one. Whether Starbucks cannibalized its stores by concentrating so many of its openings, or just ran afoul of the reality that premium coffee is being served everywhere these days, shifting the company's growth into reverse was bound to happen.
• Google (Nasdaq: GOOG) is taking online advertising to the next level by striking a content deal with Family Guy creator Seth MacFarlane. MacFarlane will create dozens of animated shorts, which Google will then serve up in an ad-supported format throughout the Internet. Content? Inserting ads into the eye candy? Oh no, Google is the online version of a television network now! YouTube was simply a gateway drug.

Until next week, I remain,
Rick Munarriz