Radio Shack CEO speaks out...

[John K5PRO]

"Even CEO Can't Figure Out How RadioShack Still In Business", from the Onion.

http://www.theonion.com/content/news/even_ceo_cant_figure_out_how

I laughed until I was in tears over this.

[W1RKW]

Yes, quite comical comments from the CEO. Wonder how long he'll last before the investors vote him out.  Nice graph too.  To bad it isn't 3D.  I'm sure it would show the downward spiral that's occuring.

[W9GT]

Gee....are ham radio operators still around?  I thought that we were in the digital age!      If he really bothered to check, he might find that those relics were some of their best customers, that is, before they got rid of their small parts inventory.

73,  Jack, W9GT 

[W1GFH]

The retail outlet...is known best for its wall-sized displays of obscure-looking analog electronics components.

If that were true, I'd shop there frequently!

[Steve - WB3HUZ]

FYI, the Onion is a parody newspaper/website.

[Carl WA1KPD]

Wall Street Journal did an uncomplimentary piece this week too.

[k7yoo]

I realize the Onion is a parody --but quite honestly it seems more in touch with reality than USA today or the NY Times. At least they have sense to make light of the drivel that passes for news. It kind of reminds me of when I was on a streetcorner in downtown San Francisco last year and heard two folks having a vigorous and earnest debate over the Da Vinci Code--like they were discussing their college physics textbook.
Partly truth and mostly fiction
reality is my worst affliction

[Steve - WB3HUZ]

True that. The NY Times is a parody of itself and quite laughable. The Onion and Scrappleface have far more to offer.

I realize the Onion is a parody --but quite honestly it seems more in touch with reality than USA today or the NY Times. At least they have sense to make light of the drivel that passes for news. It kind of reminds me of when I was on a streetcorner in downtown San Francisco last year and heard two folks having a vigorous and earnest debate over the Da Vinci Code--like they were discussing their college physics textbook.
Partly truth and mostly fiction
reality is my worst affliction

[Carl WA1KPD]

Will Radioshack let down investors?

By GREGORY ZUCKERMAN and KRIS HUDSON The Wall Street Journal

Investors have been lining up at RadioShack  Corp. They may leave disappointed.

Shares of the big electronics retailer have soared nearly 70 percent this year on enthusiasm over new management's moves to cut costs and boost profit margins. Tuesday, RadioShack was down 34 cents, or 1.2 percent, to $28.11, in 4 p.m. composite trading on the New York Stock Exchange.

Investors should realize that the run-up has come despite the fact that the company hasn't been able to sustain any significant improvement in revenue over the past decade and that its sales at stores open for at least a year fell almost 6 percent in 2006.

RadioShack also is facing some longer-term obstacles. While there likely is additional fat to cut that will help the bottom line, RadioShack's shares now are quite expensive, suggesting that anticipated improvements in operations already are factored into the stock price. RadioShack, which is at expensive levels based on a number of valuation metrics, trades at about 24 times its expected per-share earnings this year, above the price/earnings ratio of competitors such as Best Buy  Co., which has a multiple of 16.

"I sure as heck wouldn't be buying at this level; the juice is pretty much squeezed out of this orange," says Steve Monticelli, president of Mosaic Investments, a San Francisco hedge fund that doesn't have a position in RadioShack. "They don't have the growth drivers" to justify the current price.

Behind RadioShack's climb is excitement over Julian Day, who helped improve operations at Sears Holdings  Corp. and predecessor Kmart Corp. He took over as chief executive in July after the Fort Worth, Texas, retailer ousted David Edmondson for exaggerating portions of his resume. RadioShack, which has a market value of about $3.9 billion, is closing 505 stores, leaving it with roughly 6,000. It also is paring inventory and capital spending, and is laying off roughly 1,750 employees. Mr. Day says RadioShack's efforts in the foreseeable future will focus on bolstering profit rather than sales, a strategy that has helped Sears shares climb.

A number of hedge-fund traders have been buying up the stock as a momentum play, betting that Mr. Day can raise RadioShack's profit margins to those of its rivals while continuing to beat analysts' estimates. The retailer reported an unexpected 65 percent jump in profit for the fourth quarter and is expected to generate $1.16 per share in earnings this year, up from 91 cents last year, according to Thomson Financial. That 27 percent jump would be higher than the 15 percent profit rise expected for larger rival Best Buy, though RadioShack's expected gain comes off a lower base.

But earnings gains that stem from cost cutting and more-efficient operations usually are less valuable than those from rising revenue, because sales gains are considered more sustainable. And unlike Sears, almost all of RadioShack's stores are leased, reducing their real-estate value.

While Mr. Day may be able to find more ways to improve operations, the stock may climb from these elevated levels only if sales can be jump-started. But RadioShack has struggled in recent years as competitors with lower cost structures, such as Best Buy, Circuit City  Stores Inc. and Wal-Mart Stores  Inc., expanded their consumer-electronics offerings, muscling into RadioShack's profitable niches, like electronic accessories and cables.

"In an era when the margins on big-ticket items are going down, everyone's looking for ways to boost that margin up," says Steve Baker, vice president of industry analysis for market-research firm NPD Group. "One of the ways to do that is with accessories" like those sold by RadioShack.

RadioShack's heavy reliance on cellular-telephone sales, which account for a third of its total, has sapped its bottom line as customers increasingly have preferred lower-margin packages of phones with prepaid calling time. Lately, telecommunications companies have ramped up their own retail operations. And RadioShack isn't well established in the popular product categories such as flat-panel televisions, laptops and videogames.

Competition could get fiercer. Best Buy and a partner are rolling out Best Buy Mobile wireless stores, which feature more than 80 products and eight wireless carriers. Thirteen stores - either in existing Best Buy stores or stand-alone outlets - were launched in November, but Best Buy this month indicated that it would expand the concept to an additional 150 to 200 stores by the end of next year.

Alan Rifkin, an analyst at Lehman Brothers , argues that the stores will put a crimp on RadioShack's growth. Mr. Rifkin has the equivalent of a "sell" rating on RadioShack's stock and a price target of $23 a share.

In a statement, RadioShack said, "We are precluded from making comments about our business outside of earnings announcements and (Securities and Exchange Commission) filings." The company releases its financial results Monday.

Some customers appreciate the convenience of RadioShack's smaller and more-accessible stores and avoid trekking to big-box stores to buy items like cords and batteries, enabling RadioShack to reap high margins on those products. But the relatively small size of RadioShack stores limits the types of fast-growing products it can sell, such as flat-screen TVs.

Bulls counter that cash flow is strong. RadioShack's free-cash flow, a measure of available cash, is expected to be an attractive 6 percent of its current market value this year. But some of the gains come from slashing capital expenditures to about $70 million this year from $171 million in 2005.

And an "aggressive reduction in receivables and inventory resulted in close to half" of the company's free-cash flow last year, notes Anant Sundaram of Dartmouth's Tuck School of Business. "Such additional annual savings will be very difficult to achieve going forward."

[WA1GFZ]

log on to digi-key selest the stuff you want pay your money and postage and overnight it. How can RS compete with the overhead of multiple stores and staff.
If they were smart they would go mail order rather than selling useless junk toys.
oh well they can always sell that nice building in downtown F.W. and have one last good quarter.

[Herb K2VH]

The retail outlet...is known best for its wall-sized displays of obscure-looking analog electronics components.

If that were true, I'd shop there frequently!

Interestingly, not long ago a brand new Shadio Rack was opened right here in PYNY, (population 5,000) and the manager assures me that he plans to carry lots of small parts for analog stuff.  He seemed very pleased that I, as a Ham, was interested in his new store, and in the components he would be carrying.

Quote from Jack Re: Shadio Rack CEO:
"If he really bothered to check, he might find that those relics [=Hams] were some of their best customers, that is, before they got rid of their small parts inventory.
73,  Jack, W9GT"

This local manager seems to realize that.  We'll see how it all works out.

vH

[W1UJR]

True story about Radio Shack.

Like many of us, I use 1/4" phone plugs for my microphone and CW keys.
I typically fabricate an adaptor cable which ends in a stereo 1/4" female plug so I can swap in different mics or keys.

A few weeks back, I needed to build up a cable for the new QRP rig.
So I went to my local Radio Shack about a week ago looking to find a in-line 1/4" female phone plug.
Some time ago Radio Shack has switched over from the wall mounted blister packs to the "big metal box" with multiple drawers. I found a empty spot in the drawer, but no plugs.

The sales guy steps up and offers me the 1/4" chassis mount, and proceeds to tell me that Radio Shack no longer carries the 1/4" in-line female plugs. He dug out an old catalog from under the desk, back when Radio Shack printed catalogs. I found the part number and asked him to check with the other stores in the area. Sure enough, not one local store had any in stock! So the next tactic was for the sales rep to offer me one of the "pre-made" "Gold-Line" cables for $19.99 so I could cut the end off. Needless to say, I left without my phone plug.

I grew up learning about electronics via the Radio Shack "Science Fair" kits, remember those?
The little red perf board kits where one could build a wireless microphone, radio receiver, or other such gadget? And my first computer was a TRS-80, which I programed to countdown and then launch my model rockets via an output port and Radio Shack relay.

In fact my introduction to shortwave radio, which led to my ham ticket some 20 years later, was brought about by a Radio Shack DX-150 receiver. Even my first car had a Radio Shack connection. A 1970 Ford Mustang Mach 1, was purchased with proceeds of Radio Shack stock which I bought when but a junior in high school (2 for 1 stock split, twice!).

Yet now, I would invest a dime in the company, times have changed, and that iconic niche occupied by the local Radio Shack is gone. Radio Shack was never known as a proveyer of exceptionally high quality goods, but certainly the plastic Chi-Com junk they sell now is a step down. Come to think of it, as Frank pointed out, I can't see a reason to revisit a Radio Shack store again.

On the other hand, I can't really blame Radio Shack, what other course could they have taken?
The days when we repair most consumer electronics have largely gone. Most customers want "cheap", not quality items. Even the former backbone of the store, the ham population does not as a rule build much any more (present company excluded).

So where does Radio Shack go now, in the halcyon days of Best Buy, Circuit City and overnight shipping from Mouser or DigiKey?

[Carl WA1KPD]

I was reading an article about the recent run up of Radio Shack stock and it concluded

"The latest bounce in RadioShack stock came after an online columnist with another news organization pondered whether Dell should make a bid for RadioShack in order to acquire a bricks-and-mortar outlet for Dell's computers, digital music players and flat-screen TVs."

So the value is not in the product offering, or company but is in the real estate

[Jim, W5JO]

Anytime one considers buying a place, whether a Radio Shack or a single outlet location, part of the sale is what is called Blue Sky.  This is the goodwill a store carries forward to the new owners.  It can be a tax liability for someone if not careful.  In my mind the Blue Sky for RS is questionalble.

Dell might be better off just opening their own stores.

[Bill, KD0HG]

I worked for an RS store in a Chicago suburb right out of high school.

I deliberately ordered a bunch of ham-and CB related stuff; antennas, CB rigs, coax, connectors, solder, SWR bridges, tubes and anything else that I could order from corporate HQ. Even some Vibroplex stuff. And ham gear- there was the Allied-Radio Shack A-2517 SSB transceiver (a Kenwood)Talked radio and electronics with the customers.

Set up a ham area with glass counters in the store and did an absolutely killer business once word got out. The manager was astonished at his top punk salesdude.

I moved on, the shopping center was razed and that was it.

That was one long time ago.