Ahead of the Bell: Circuit City meeting

Circuit City, facing the heat from activist shareholders, agreed to nominate dissident directors to its board and hired Goldman Sachs & Co. to explore strategic alternatives, including a possible sale.

Amid a weak U.S. economy, the company posted recently a bigger first-quarter loss, as a drop in sales at established stores dragged down results. Circuit City also predicted a wider second-quarter loss that was larger than analysts expected and suspended its dividend.

In a client note on Friday, Lehman Brothers analyst Michael Lasser, who rates the stock "Underweight," thinks the company has enough access to capital in the foreseeable future, but suspects investors will focus on liquidity.

"During the quarter, Circuit City's liquidity position significantly deteriorated as its cash balance declined to $92.2 million as of May 31," Lasser wrote in a client note.

Lasser said Circuit City may benefit from consumers' tax stimulus checks, but thinks that will only temporarily improve structural issues facing the company.

On Monday, shares of Circuit City dropped 91 cents, or 21.3 percent, to close at $3.37--a level not seen since 1991. The stock is up 1.9 percent so far this year.