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Posted on 02/17/2006 12:06:55 PM PST by iPod Shuffle
RadioShack to close up to 700 stores
Fri Feb 17, 2006 1:16 PM ET
By Nicole Maestri
NEW YORK (Reuters) - RadioShack Corp. (RSH.N: Quote, Profile, Research), whose chief executive has admitted to lying on his resume, on Friday said quarterly profit fell 62 percent after a switch in wireless providers led to an inventory write-down, sending its shares to a nearly three-year low.
The consumer electronics retailer, which said it was hiring legal counsel to investigate the admission by CEO David Edmondson, also announced a new turnaround plan that includes closing 400 to 700 company-operated stores and liquidating slow-moving inventory.
The company said it was "unwise" to issue earnings forecasts for 2006 given the uncertainty of the turnaround plan, which could cost up to $100 million.
"We have been very cautious on (RadioShack's) ability to execute the wireless transition smoothly and are skeptical on the just-announced turnaround," Lehman Bros. analyst Alan Rifkin said in a note. "We would not be owners of (the) shares at this time."
RadioShack shares were down $1.61, or 7.8 percent, at $19.14 in afternoon New York Stock Exchange trading after touching as low as $19.02.
FALLING EARNINGS
Fourth-quarter earnings fell to $49.5 million, or 36 cents per share, from $130.9 million, or 81 cents per share, a year earlier.
According to Reuters Estimates, excluding 22 cents per share for the inventory write-down and a 2-cent charge for an accounting change, profit would have been 60 cents, which compares with the analysts' average forecast of 66 cents.
Sales rose 5 percent to $1.67 billion, compared with analysts' target of $1.62 billion.
The results come two days after Edmondson admitted that he lied about his academic record on his resume and on the company's Web site. The discrepancy was first reported earlier this week by the Fort Worth Star-Telegram.
At an investor conference, Edmondson began by apologizing for any embarrassment the situation caused and said the issue was now in the hands of the board.
As for the quarterly results, Edmondson said sales were "good" in low-margin nonwireless categories like MP3 players, but were weak in high-margin categories, like batteries. Sales of wireless products, a key profit driver, were below targets.
Last year, RadioShack said it would switch phone carrier partners to try to revive its wireless sales. It agreed to sell Cingular Wireless phones and cut ties with long-time ally Verizon Wireless. It also signed a new 11-year deal with Sprint Nextel Corp. (S.N: Quote, Profile, Research).
But the transition, which took place at the end of the year, turned out to be more difficult than expected.
On Friday, RadioShack said it took an inventory write-down of $62 million in the quarter, and it is replacing old, slower-moving merchandise like speaker wire and outdoor antennas with new, faster-moving items
"Our business model for many years has been based on high- margin, slow-moving products," Edmondson said during an investor presentation. "These products are taking up valuable space in the store that can be much more efficiently utilized."
RadioShack said it would liquidate some products, take "aggressive" mark-downs on others and let some stay on store shelves until they sell out. It will continue to sell some of the products on its Web site, though not in the stores.
The company also expects to add about 200 kiosks in 2006, relocate some stores to better sites, and close two distribution centers.
RadioShack, which has 7,000 company-owned and dealer stores, estimated it would incur costs of $55 million to $100 million on the inventory write-downs and store closures in 2006, although it may take some of the costs in 2007, depending on when it closes the stores.
"While the execution of the turnaround plan will trigger the recognition of significant costs," Edmondson said, "we are confident that the steps we are taking will put RadioShack back on the track to sustained profitable growth."
Thanks for the link to Radio Daze. I promise not to tell my wife that you were the one to steer me to yet another place to buy goodies. ;-)
Ham Radio Ping ListPlease Freepmail me if you want to be added to or deleted from the list.
There are still some fantastic kit manufacturers out there, though most specialize in ham radio gear rather than general electronics. Give these a try:
Elecraft
My K2 was an absolute blast to build. My dfaughter enjoys it as well. ;-)
dahdahdididit didididahdah
A PS to my last post - I love your radio bench. It's easy to tell that you have a lot of fun with your rigs. My kinda shack!
But Radio Shack always went one step beyond awfulness. Last time I was in there was about 10 years ago when I had to buy a phone cord or something like that. For like a $4 cash sale, it took me about five minutes to complete the purchase because the kid at the counter had to write the entire sale out on an order pad, listing item number, price, and all kinds of other irrelevant information. To top it all off, he insisted on putting my name, address and phone number on the form. Finally I just gave him a bunch of bogus information just so I could get the damn phone cord and get the hell out of there.
I hope so.
I just realized the picture shows my Realistic boom box purchased in 1983.
BTW, the "mouse" is a cw key.
Neat idea! Left click for dots, right for dashes?
Why would one not be?
It started out as a pretty good deal when they only asked for name and address. Quite a while back Radio Shack used to mail out their annual store catalog which was full of goodies even down to tubes and phono needles etc. It saved you a trip to the store to see if they even carried an item. They also mailed out seasonal smaller catalogs. Now they use it mainly for tracking purchases. It's been a long time since I've gotten even a flyer of substance from them though.
Times have changed though. We were at the mall the other day and JC Penny's was selling their store catalog for $5 I think. Heck Sears and Roebuck used to mail them out free and would give them away.
The moderate sized town where I grew up was home to three decent parts sources - Lafayette Electronics, Radio Shack, and a hometown place called Port Electronics. Rat Shack is still there (though maybe not for long), but the other two are dead and buried.
I've been fortunate to live where there are still some decent "old school" sources for parts. During my Central Florida days I almost had a designated parking space at Skycraft Parts and Surplus. In Denver, it's Fistell's and Gateway. The best part of visiting all of those places is that on any given trip it's never certain what weird and wonderful things will be waiting there to be discovered.
I quite agree with you on a name change. They should take the "Radio" out of the name since they now sell almost no radios other than cheapo Chinese made junk. Their AM radios can barely pick up a 50,000 watt station at night. They no longer sell any amateur radio radios and their parts inventory has dwindled to nothing. This is too bad since they were the only place around to get certain parts.
Yep. Used to be people who actually like to build things. Now... Well, RS no longer carries much of anything. Mouser electronics or Ebay is the "local" store now. Electronics magazines are nearly extinct except for those from England. Sad state of affairs.
The beauty of the K2's keyer is it allows the two to be swapped it will.
I always give an address I once had in Bridge of Don, Aberdeen, Scotland. Drives them nuts!
Peace is our Profession. War is just a hobby. And I've been at this hobby for many, many, years.
Aim High! I'm driving a fuel truck!
Me in 1990.
I'd be spending nearly all of my Saturdays there plus many weeknights up to about 4 AM. (it always seems to me that the good stuff happens really late)
Here in hurricane country we very much appreciate the countless hours that ham radio community puts forth. If you think about all the people at TV stations, police departments, National Guard, paramedics, firemen etc. that are hard at work, remember that out of all that, the hams are among the very few who are not getting paid. No tax dollars, just good citizens who devote a lot of time and money (ham gear ain't cheap) to public service.
The government (FCC) rewards them by chopping up the ham bands in ever smaller pieces. In spite of all this the ham operators continue to be the most courteous radio operators out there.
I have a neighbor who has a set of beams up on his roof. A couple Saturdays ago I walked by while he was working outside on some connections. Aloft there must have been at least a half-dozen pigeons perched on the beam elements, so I asked him if the 'bird count' affected the SWR. Although I was joking, he said they really did affect it and for a while he couldn't figure out what was changing the tuning characteristics of the antenna system when nothing else had been changed.
This might work as it helps on commerical buildings. Tell him to go to Home Depot and by an artifical owl. That should keep them away.
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