UPDATE 2-Circuit City posts wider loss, suspends dividend

(Adds analyst comment)

NEW YORK, June 19 (Reuters) - Circuit City Stores (CC.N: Quote, Profile, Research, Stock Buzz) reported a bigger quarterly loss on Thursday as sales fell, and the consumer electronics chain said it had suspended its dividend to save cash, sending its shares down about 3 percent.

The company, which has received a takeover offer from Blockbuster Inc (BBI.N: Quote, Profile, Research, Stock Buzz), also said it would cut back on capital expenditures this year and forecast a wider loss for the current quarter amid weak U.S. consumer spending.

But Circuit City said it expected a "gradual recovery" in the second half of its fiscal year, which ends in February.

"I'm highly skeptical of the company's ability to turn around results in the second half," said FTN Midwest Securities senior analyst Anthony Chukumba. He added that Circuit City "continues to cede market share to Best Buy (BBY.N: Quote, Profile, Research, Stock Buzz)."

Circuit City's net loss widened to $164.8 million, or $1 a share, in the first quarter that ended May 31, from $54.6 million, or 33 cents a share, a year earlier.

Analysts expected a loss of $1.08 a share, according to Reuters Estimates.

Sales fell 7 percent to $2.3 billion as weakness in the United States offset gains internationally. Sales at stores open at least a year fell 11.3 percent overall.

Products posting weaker sales included TVs, where declines in projection and tube sets offset strength in flat-panels; digital imaging; and camcorders. Extended warranty sales fell to $53.8 million from $73.7 million a year earlier.