Best Buy (BBY) shares are getting a boost this morning from a bullish note by Goldman Sachs analyst Matthew Fassler, who added the stock to his firm’s Conviction List. Fassler had upgraded the stock to a Buy rating in early January. He has a price target on the stock of $33.

Fassler expects the company to benefit from the demise of rival Circuit City. He now sees EPS for the February 2009 fiscal year of $2.40, up from $2.27. For 2010, he goes to $2.54, from $2.47. Fassler thinks the company will capture a significant portion of the “freed-up” Circuit City sales.

Slightly tempering Fassler’s enthusiasm for the shares is a view that once the market adjusts to the disappearance of Circuit City, the company will have to take on Wal-Mart (WMT) and Amazon.com (AMZN).

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J.P. Morgan’s Imran Khan theorized in a research note this afternoon that Amazon.com (AMZN) could eventually be a beneficiary of the demise of Circuit City (CC), which earlier today said it would close all of its remaining stores and liquidate.

In the short run, it’s not likely to help, as the inventory from the company’s 567 remaining stores is sold off in a giant going-out-of-business sale that could pressure pricing in the already soft consumer electronics sector. But Khan also estimates that the company did $1.2 billion to $1.4 billion in online sales in its most recent fiscal year; he notes that, according to ComScore (SCOR), CircuitCity.com was the 11th largest Internet retailer by unique users through November. The company will stop operating the site as of Jan. 18, it said today. Khan thinks Amazon could inherit as much as half of Circuit City’s online business.

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Gimme Credit analyst Carol Levinson late Friday cut her credit rating on Best Buy (BBY) to “Deteriorating” from “Stable.”

In a research note, Levinson notes that the company in the long run should benefit from the bankruptcy and liquidation of Circuit City (CC), Tweeter and “whomever among its competitors might be the next to go.” But she adds that “in the short run it must join the lengthy list of retailers experiencing weaker sales, strained liquidity, and contracting margins.”

Levinson also notes that most of its merchandise is “largely discretionary in nature and margins in electronics were low to begin with even before the latest promotional binge.”

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In March 2007, Circuit City came up with a plan to confront softening sales and competition from online and offline retailers: Fire the most talented, experienced employees.

Of course, those workers were the retail chain’s single most important point of difference from the legion of Internet retailers and general merchandisers, but in a single stroke, Philip J. Schoonover, the chief executive of Circuit City, wiped out that future.

As a pal of mine used to say when I described a particularly boneheaded course of action I had pursued, “How’d that work out for you, buddy?”

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Research In Motion (RIMM) turns out to be yet another company that simply can’t escape the clutches of the crumbling global economy.

Several analysts weighed in today with estimate cuts, pressuring the stock.

Merrill Lynch’s Vivek Arya cut this EPS estimate for the fiscal third quarter ended November to 80 cents from 95 cents, which is now below the Street at 92 cents. For the February 2009 fiscal year, he goes to $3.45, from $3.61, and for 2010, he goes to $4.08, from $4.45. Arya cited a number of factors for the downgrade, including macro headwinds, the late North American launch of both the Storm and the Bold, and increased competition from the Apple (AAPL) iPhone. He also notes that warnings from Best Buy, Circuit City and Intel suggest we are in for weak consumer demand in calendar Q4. “While smartphone demand would normally be more resilient due to carrier promotions and productivity benefits, the current environment demands caution,” he writes. His target price on the stock drops to $65, from $80.

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Blockbuster (BBI) after the close Tuesday announced the termination of its bid for Circuit City (CC). In a statement, Blockbuster CEO Jim Keyes said that “based on market conditions and the completion of our initial due diligence process, we have determined that it is not in the best interest of Blockbuster’s shareholders to proceed with an acquisition of Circuit City.”

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So, uh, I guess this is good news. Circuit City (CC) this morning reported results for its fiscal first quarter–which ended May 31– that were by most objective measures pretty bad, but nonetheless not quite as bad as the company had forecast.

For the quarter, the company had revenue of $2.3 billion, down 7.4% from a year earlier, and a tad below the $2.37 billion Street consensus. But the loss from continuing operations in the quarter of $164.8 million was less than the previously forecast loss of $180 million to $190 million. See: good news!

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Blockbuster (BBI) shares are getting a lift today from Citigroup’s Tony Wible, who raised his price target on the stock to $8.50 from $8 and added the stock to the firm’s “Top Picks Live” list.

Wible writes that the company’s Q1 results reported yesterday provide evidence that the company’s turnaround is bearing fruit. He writes that that company has produced improvement in inventory management, raised prices for its Total Access service and cut costs. He also repeated his view that the company’s proposed acquisition of Circuit City (CC) would “provide cost synergies and help BBI become an open provider of technology and content.”

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