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Author Topic: Radio Shack for Sale  (Read 1126 times)
N3XP
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Posts: 80




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« on: March 26, 2010, 11:15:05 AM »

Yes, it looks like the end could be near for once mighty Radio Shack.  After years of changing its product line and focus, it looks like RS is no longer able to compete with the big retailers and the internet.

Story here:
http://www.nypost.com/p/news/business/radioshack_search_G0XzMIn7DFx74tx6LpUzVJ
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AA4HA
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Posts: 1377




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« Reply #1 on: March 26, 2010, 01:44:10 PM »

This just means you will not even be able to buy solder there. They sold out decades ago.
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Ms. Tisha Hayes, AA4HA
Lookout Mountain, Alabama
W7ETA
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Posts: 2528




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« Reply #2 on: March 26, 2010, 04:26:07 PM »

I'm surprised they've lasted so long.

If I need parts, I use the internet.
I buy groceries at Wallmart.

The last TV I bought was over the internet.

Parts to build computer, internet.

I-pod, internet.

Parts to build a power suppl and CW xmitter, internet via eBay.

New releases of Hendrix albums, internet via Amazon.

New sat receiver-recorder, yup, internet.

I just got in some full range speakers from a source in Canada.  The speaker box plans from a fellow in the UK.

Software is downloaded.

Best from Tucson
Bob
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WB2WIK
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Posts: 20540




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« Reply #3 on: March 27, 2010, 02:37:52 PM »

They made a series of monumental mistakes and you can't put the toothpaste back into the tube.
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W7ETA
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Posts: 2528




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« Reply #4 on: March 27, 2010, 07:19:21 PM »

But they have outlasted Circuit City.

Maybe their biggest mistake was not being able to buy enough members of Congress so that legislation would have allowed them to become to BIG to fail?

73
Bob
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KS2G
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Posts: 362




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« Reply #5 on: March 29, 2010, 05:31:27 AM »

Sad but true that RS long-ago ceased to be a place catering to hams, audiophiles and electronics hobbyists.

But you're all mis-reading the story.

Far from being "on the rocks" it appears that their problem is that they've grown so much that they can't figure out how to grow any more.

The article quotes a banker as saying "they've reached a point where they can't just keep building RadioShack stores".  (Don't know about your area, but in my neighborhood there are two RS stores just 2-miles apart, and three others within a 5-minute drive.)

The article says they have $900 million in cash that could be used for a stock buy-back or to purchase another company. And that if RS sold-out to another firm, it would fetch more than $3 billion!

Their stock price peaked at about $35 in mid-2007 and hit a 5-year low of around $7 in early 2009. But since then it's been on a more-or-less steady climb and currently is at $23. That's a gain of more than 200% (triple your money) in less than a year!

See: http://finance.yahoo.com/q/bc?s=RSH&t=5y&l=on&z=m&q=l&c=

Not exactly a company about to "go under".

73,
Mel - KS2G
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N4CQR
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Posts: 566




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« Reply #6 on: March 29, 2010, 05:37:25 AM »

I wonder whah happened the name change to "THE SHACK"

Anyway, Radio Shack is a proffit toy for big investors. As long as they can buy a 20 or 30 cent item and retail it for $4.95, they ain't goin out of business. Audio related stuff has a tremendous markup. 3-foot RCA to RCA cable - general purpose costs $0.83 and retails for $5.49. This is stuff made in China and similar countries.
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N3XP
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Posts: 80




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« Reply #7 on: March 29, 2010, 06:40:04 AM »

"Far from being "on the rocks" it appears that their problem is that they've grown so much that they can't figure out how to grow any more.

The article quotes a banker as saying "they've reached a point where they can't just keep building RadioShack stores". (Don't know about your area, but in my neighborhood there are two RS stores just 2-miles apart, and three others within a 5-minute drive.) "

Take a look at what happened to Steve and Barry's.  The only growth came from building new stores.  If your only real growth is coming from building new stores then you current store are under performing or flat.  RS is about to collapse under its own weight.  They are prepping for sale now while the books still look good.  Anyone who buy RS is not looking at RS to continue as RS.  RS has prime mall spots in just about every major US mall.  That is what you are looking at buying.  Similar to the way McD's bought Boston Market for the locations.  Another article mentioned that potential buyers would be interested in the locations to rebrand as its own small format store.
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AD6KA
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Posts: 2232




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« Reply #8 on: March 29, 2010, 01:00:37 PM »

"They sold out decades ago."

Yeah, but as they are now they're still really handy if you need to buy an LED, common value 1/4w resistor, small rectifier diode or LM317 voltage regulator on Sunday afternoon when everyone else is closed. Just don't ask the clerk what you need unless you want to get "that look" = "Uh.....what the HELL are you talking about?" :>
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W7ETA
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Posts: 2528




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« Reply #9 on: March 29, 2010, 01:31:10 PM »

"If your only real growth is coming from building new stores then you current store are under performing or flat."

I heard a rumor that companies look at "Cash Flow" as one indicator of performance.  After all, one must have "cash" to open new stores, cash for store inventory, cash for pay roll, cash and space at regional warehouses to support new stores, trucks for additional transportation of new inventory, and additional support staff at both regional and Fort Worth.

" RS is about to collapse under its own weight."

I also heard a rumor that if a business is in the area where marginal revenue is close to marginal cost, it may be a good indicator that further expansion isn't warranted?  If marginal revenue and marginal cost are about equal for new stores, it may not indicate that prior stores are about to collapse.

One could also look at the rates of return a business is generating.  If its high compared to other companies in a similar industry, maybe the other business are about to collapse?

"They are prepping for sale now while the books still look good."

I also heard a rumor that some companies have or hire accountants to go over a business before consider buying it.  It seems to me, I've also heard a rumor one can hire a firm that specializes in "Mergers and Acquisitions" to analyze a company.

I seem to remember that our Uncle Sam has rules for doing tax returns, rules for valuing, and rules for depreciation.  As a result, companies have to maintain "books" for tax purposes, "books" for reporting based upon other rules, like GAP, and "books" for internal purposes, to represent to management the performance of the company.

Could it be that a multinational corporation like Radio Shack has more expertise than people who post on eHam?

73
Bob
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N3XP
Member

Posts: 80




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« Reply #10 on: March 29, 2010, 01:46:08 PM »

You have good advice, you should follow it and quit yammering about how smart you are as you don't practice what you preach.

I bet RS is sold or out of business within a year.
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W7ETA
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Posts: 2528




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« Reply #11 on: March 29, 2010, 01:50:11 PM »

I'm glad some one with cost accounting experience has posted, cause there are many aspects of cost accounting I don't understand.  This cable seems like a good example.

If it costs .93 to buy in bulk from China, how does one assign the cost to transport to the West coast port?  If it costs, lets say $1,000 for the shipment, and the shipment contains other small parts in addition to many types of cables, how is the $1,000 assigned?  Is it by the volume each items takes up?  By the weight of each item?  By the total number of individual items?  Divide the $1,000 by the total cost of the items shipped?

How does one assign the cost of labour to get the cable into the warehouse?  How does one assign the cost of running the warehouse to the cable?  How does one assign the cost of picking and packing the cable to be shipped to the store?  How are the costs of running the store, regional offices and Forth Worth office assigned to the cable?   How is the cost of having an employee unpack a shipment of small parts at the store and place the item on the wall?  If it takes the same amount of time for an employees to "ring-up" a cable as it does a $250 scanner, has is the check-out time assigned to each item?

Thanks for explaining all of this to us.

73
Bob
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W7ETA
Member

Posts: 2528




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« Reply #12 on: March 29, 2010, 02:03:06 PM »

"Radio Shack is a proffit toy for big investors."

Dam.  Even more new stuff to learn about.
I've never heard of a profit toy?  How does one define a profit toy?  What other companies are profit toys?

I like toys.  Why are profit toys limited to big investors?  If a RS employee buys stock thru RS's stock purchase program for employees, do they get a profit toy?  If I buy RS stock do I get a profit toy?

Thanks for explaining all of this to us.

73
Bob
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W7ETA
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Posts: 2528




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« Reply #13 on: March 29, 2010, 02:16:03 PM »

"I bet RS is sold or out of business within a year."

How did you decide how much to bet on their stock going down?

I've been fascinated by people who "short-stock".  How did you pick a date to sell RS stock in the future?  Do you spread the sales agreement over many days and weeks? How much does a contract to short stock cost?  How much money do you have to put up on your bet?

73
Bob
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W7ETA
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Posts: 2528




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« Reply #14 on: March 29, 2010, 02:36:58 PM »

Wait a second!?

"other options for RadioShack include using its $900 million cash hoard to either initiate a "massive share buy back," in the words of one Wall Street banker, or even make a strategic acquisition of its own."

Cash hoard?!  Massive share buy back?!  Strategic acquisition?!  Those indicate a company on the verge of collapse?

"despite a recent run-up in the company's shares, some bankers say RadioShack's fat margins and solid cash flow could help finance a healthy takeout premium to the current market capitalization of $2.7 billion."

If investors buy it they might have to pay more than current stock prices?!  How is that an indication of a company on the verge of collapse?

You got me confused.  But, since I'm not a business analyst, that's easy to do.

It seems to me that the "experts" don't know what RS is going to do.  Sorta reminds me when I see on TV that a company didn't meet analysts' predictions.  My immediate reaction is that the analyst guessed wrong.

73
Bob
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