Profit Plunge Slams Sears

Updated from 11:09 a.m. EST

Shares of Sears Holdings (SHLD Quote) dropped below the $100 mark on Thursday for the first time in their two-and-a-half year existence after the company reported disastrous third-quarter results that suggest its days as a retailer could be numbered.

Fans of the company's chairman, Greenwich, Conn., hedge fund manager Ed Lampert, say that Sears may be a dying retailer, but it's cash can be invested elsewhere by a value-investing genius. Others say the path to riches at Sears lies in the hidden value of its real estate, which guarantees upside in the stock -- even in the event of a liquidation.

With shares of Sears down nearly 50% from their April all-time highs, such convictions are looking increasingly precarious as the U.S. housing bust threatens to plunge the economy into a recession. The company's cash flow is dwindling as its profitability sinks, and real estate values are mired in a cloud of uncertainty.

Meanwhile, there's no sign that Lampert has another blockbuster acquisition in store for the company that could get its shares moving again the way his 2005 purchase of Sears Roebuck with Kmart stoked exuberance on Wall Street back in his high-flying days at the height of the housing bubble. Currently, he's making a bid to buy Restoration Hardware (RSTO Quote), a floundering retail chain with just $713 million in annual revenue.