Circuit City annual meeting comes amid buyout talk

Circuit City also expects a bigger loss in the second quarter than analysts are predicting.

But Schoonover said he is encouraged by improvements Circuit City is seeing in many of its operating performance measures. The company is also suspending its dividend to keep capital available for its turnaround.

"We're on the right track, with the right strategies, the right talent and improved processes to execute a successful turnaround," Schoonover said.

Last month, Circuit City gave in to pressure from activist shareholders, essentially putting itself up for sale and agreeing to nominate dissident directors to its board.

The company hired Goldman Sachs & Co. to explore strategic alternatives--including a sale--to boost shareholder value. But Schoonover said the board has not yet determined a plan.

The company also announced it would open its books to Blockbuster Inc. after Blockbuster's largest shareholder, Carl Icahn, eased concerns over whether the video-rental chain could finance a purchase of Circuit City by saying he was prepared to buy the company if all else fails.

Dallas-based Blockbuster is in the process of conducting due diligence in its takeover bid of just over $1 billion; it plans to create a chain that would sell electronic gadgets and rent movies and games.

"It's our hope that the due diligence will validate the strengths we see in the possible combination," Blockbuster spokeswoman Karen Raskopf said. "But if it doesn't we'll move on and focus on our core business."

Circuit City filed papers last week with the Securities and Exchange Commission indicating it may issue stock or debt to gain "greater flexibility to respond to strategic opportunities as they arise."

Soleil Securities Group analyst Scott Tilghman said in a recent note to investors that Circuit City has several alternatives to choose from besides simply "staying the course."