CLOSEOUT AT CIRCUIT CITY

By JAMES COVERT

Circuit City has shorted out for good.

The nation's second-biggest electronics chain, which had filed for Chapter 11 in November, said it will begin liquidating its stores today after it failed to reach a deal to sell the company.

The 60-year-old retailer last year hired Goldman Sachs to find a white knight for its struggling business. During the summer, Circuit City briefly flirted with video-game giant Blockbuster on a prospective merger that had been pushed by billionaire financier Carl Icahn.

Circuit City most recently had drawn interest from buyout firm Golden Gate Capital, as well as Mexican media tycoon Ricardo Salinas Pliego. While negotiations lasted past midnight Thursday, Circuit City said it couldn't secure the necessary financing.

"This is the only possible path for our company," said acting Circuit City CEO James Marcum. "We are extremely disappointed by this outcome."

Circuit City - whose demise will leave more than 30,000 employees jobless - is the latest casualty of one of the worst holiday seasons on record for retailers. Hit by a sharp pullback in shopping demand for big-screen TVs, digital cameras and DVD players, Circuit City likewise was crippled by tightened credit from suppliers.

Going-out-of-business sales at the company's 567 stores will lure customers away from arch rival Best Buy in the near term.

But increased market share could add 50 cents to Best Buy's earnings per share next year, estimated Anthony Chukumba, an analyst at FTN Midwest Securities.

It's not clear whether Circuit City's prices on big-ticket items like flat-screen TVs will go still lower as it liquidates its stores, sources said. That's because liquidation firms have become sophisticated when it comes to promotions.

Still, economic woes including the worsening employment picture make still-lower prices a good bet.

Industry experts say Circuit City won't be the last chain to disappear as the recession wears on.

Already over the past year, the economic crisis has claimed as victims major retailers including Linens 'n Things, KB Toys and Mervyn's, a discount department-store chain that had operated stores across the Southwest. james.covert@nypost.com