Here's some numbers:
Mkt cap: £262m
Div cover: 1.7
Int cover: 9.6
Now Avg Turnover 1956 1824 Op Profit 70 100 EV/Sales 0.18 0.40 PE 5.0 11.0 EPS 11 10.8
So, on the basis of EV/Sales, we could expect a doubling of the company share price. On the basis of PE ratios, the fair value would be 118p (=11.0 x 10.8), which, again, is about double. Brokers estimate rising forecasts (13% growth next year, 6% thereafter).
The yield looks very good, and hopefully safe, especially in light of forecasted profit increases. Even if they were to halve the dividend, that would still be very good. I don't see why they would need to suspend the dividend, certainly not at this point in time, anyway.
Now, OK, there's a fair bit not to like about HMV. The particular worry is that it's a niche retailer where the internet is threatening to obsolete its business. So, I wouldn't necessarily hold out for the shares to double, because I think it's likely that the nature of business has changed; but there would be quite a lot of margin for error if one decided to sell out at a 50% gain from here (assuming that such a thing happens, of course).
Footise is at 5240.