The Five Dumbest Things on Wall Street

4. Buster City

Beset on all sides by the iniquities of competition and the tyranny of an obsolete business model, Blockbuster BBI chose a puzzling path this week. It's offering to shell out $1 billion for scorned electronics retailer Circuit City CC.

Speculation on the Street has it that Blockbuster, which readers may remember once having visited before Netflix NFLX began delivering their DVDs, is attempting to expand its real estate footprint.

The staggering video rental outfit also may be setting up to make inroads against Apple'sAAPL Apple TV, a device that allows users to beam movies off the Internet onto their TVs. Blockbuster reportedly has its own gadget in the works.

Perhaps the rental outfit will use its newly expanded real estate footprint to provide convenient locations for sale of its Apple knockoff. Circuit City is itself skeptical of the idea, objecting that, among other things, Blockbuster won't be able to foot the bill.

Even if billionaire investor Carl Icahn, who has a stake in Blockbuster, offers some cash, Street analysts have other concerns. A Jeffries analyst said the merger would hurt Blockbuster's online competition with Netflix. JPMorgan dropped its rating on the stock to neutral from buy, noting that Blockbuster would need to cut Circuit City costs by hundreds of millions a year to break even.

Dumb-o-meter Score: 85. The Circuit City acquisition, Blockbuster says, would create a "game-changing retail concept." They might consider hitting reset.