Operating income has declined steadily, debt/equity increased steadily, they're getting wasted by Amazon and Wal-Mart, same as Circuit City and Best Buy.
Will Radioshack go bankrupt?
- Thread starter kjones5159
- Start date
Does anyone walk into a Radio Shack and think, "Oh yeah - this is a good business model." They made their money selling all the little $3 doohickeys that cost 5c to make. Now that business has moved to the net.
What's amazing is that they didn't go out of business years ago.
Here is an old analysis that seems right on track:
http://www.theonion.com/articles/even-ceo-cant-figure-out-how-radioshack-still-in-b,2190/
http://www.theonion.com/articles/even-ceo-cant-figure-out-how-radioshack-still-in-b,2190/
I read their most recent 10-Q and they're just inching into the red now, though they've obviously been in decline a while.
They have a pretty decent cash pile and new credit line and some convertables also to burn through before they're empty, though it will invariably end that way IMO.
They might be able to hold out another 2-3 years.
Though equity in such an operation would be worth next to nothing long before they actually fold.
Good short for the forseeable future, I don't think anybody would pay money to take that over either, the model is done not the company itself.
Do your own due diligence of course, but long dated puts seem sensible.
No strategic acquisition, unless Schulze of Best Buy wants a bigger ship to go down with or something crazy like that.
They have a pretty decent cash pile and new credit line and some convertables also to burn through before they're empty, though it will invariably end that way IMO.
They might be able to hold out another 2-3 years.
Though equity in such an operation would be worth next to nothing long before they actually fold.
Good short for the forseeable future, I don't think anybody would pay money to take that over either, the model is done not the company itself.
Do your own due diligence of course, but long dated puts seem sensible.
No strategic acquisition, unless Schulze of Best Buy wants a bigger ship to go down with or something crazy like that.
Not sure what you guys are talking about. YTD they've lost about 17 million on YTD revenue of $4.3 billion. Even though they've lost a small amount the last 2 quarters, their revenue has still grown every year for the last 3 years. That doesnt sound like a sinking ship to me. In fact, it looks to me like radioshack is oversold. Only a month ago 7 different directors of the company were buying in the $2.50-$2.70 range buying a few hundred thousands shares collectively.
Revenue is irrelevant if you don't net anything. Revenue may have increased but operating and net income have steadily declined, cutting prices to try and compete with Wal-Mart and Amazon. Classic situation where a specialty (RSH) has its business moved in on by larger and more diversified, lower profit margin players.
It's like a price war with Standard Oil, that happened plenty of times, let me know if you find out anything different than I did.
RSH has no moat, stricly price competitive. If you want an iPhone, you.have to pay Apple the ungodly price tag, or you don't get an iPhone.
Radioshack has no exclusivity of products, thus they can only compete on the basis of price on the same products as everyone else, Wal-Mart and Amazon will always be the two headed dragon of super low margins.
It's like a price war with Standard Oil, that happened plenty of times, let me know if you find out anything different than I did.
RSH has no moat, stricly price competitive. If you want an iPhone, you.have to pay Apple the ungodly price tag, or you don't get an iPhone.
Radioshack has no exclusivity of products, thus they can only compete on the basis of price on the same products as everyone else, Wal-Mart and Amazon will always be the two headed dragon of super low margins.