I think I rented this one already
Combine the bright red Circuit City (NYSE: CC) uniform with the light blue Blockbuster (NYSE: BBI) garb, and what do you have? A magenta wizard's robe that's run out of magic? The wardrobe combinations are endless if Blockbuster is able to complete its unsolicited bid to acquire Circuit City for between $6 and $8 a share.

It may have been a shocking move, but I can see what Blockbuster was going for. The video-rental specialist realizes that its best shot at sticking around is as a retailer of real goods. Lending out DVDs -- and now Blu-rays -- has been fun, but digital delivery will eventually make flick consumption something we all do without ever leaving the couch.

The market doesn't seem to think a deal will happen, but that pessimism has more to do with Circuit City than with Blockbuster's aim. Circuit City, after all, has been busy channeling Microhoo by whining about being worth more than the premium buyout offer it received.

That's not a new attitude for Circuit City, either. The electronics retailer has a track record of arrogance that includes foolishly turning down exit-strategy checks of $8 a share in 2003 and $17 a share in 2005.

I believe Blockbuster is on the right track with this strategy. But it's probably best served by moving on and turning its attention to other consumer-electronics retailers that are more open to a deal. Isn't Sharper Image on the block? If Circuit City isn't interested, Blockbuster might as well leave it standing hungry on the side of the road, hitchhiking for a better ride that's unlikely to come.

Briefly in the news
And now, let's take a quick look at some of the other stories that shaped our week.

  • Crocs (Nasdaq: CROX) shares got slammed when the company dramatically talked down its guidance. The company will also be closing down one of its factories. Despite healthy overseas growth, the company isn't doing its holed footwear any favors in shaking the "fad" tag. Is it too late to insert wheels that pop out?  
  • Way to go, Amazon.com (Nasdaq: AMZN). You're now the second-most-popular retailer of digital music. Of course, you're moving just a tenth of the tracks that Apple (Nasdaq: AAPL) does. So saying you're second in digital tunes is a lot like saying that you're the second-biggest premium coffeehouse chain, or that you're putting out the country's second-most-popular computer operating system. No offense on that last point, Apple.
  • Google (Nasdaq: GOOG) helped the cause of its Google Apps suite of applications software by further integrating it with Salesforce.com's (NYSE: CRM) Web-stored enterprise-software solutions. That's nice, but do I need to slap on a cupid outfit and lob an arrowhead to point out the obvious here? (Trust me, you don't want to see me in a cherub outfit.) Google would be better off acquiring Salesforce at this point. The company is already dangerously tethered to online advertising, which accounts for nearly all of its revenue. A little high-margin subscription revenue, especially with well-heeled corporate accounts, would make for perfect diversification.

Until next week, I remain,

Rick Munarriz

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Longtime Fool contributor Rick Munarriz recommends windshield wiper fluid when trying to look back. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the stocks in this story, save for Crocs. The Fool has a disclosure policy.