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RadioShack Corp. Message Board

  • vicprobey vicprobey Jun 4, 2007 11:16 PM Flag

    Why would Eddie Lampert buy this thing??

    Sears had the cash to buy RSH 6 months ago instead they watched the price almost double since January. Why would he pay almost double for this company now??

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    • If Lampert wants to buy a has been retailer he typically does it at an EV/Revenue ratio in the range of 0.2-0.5.

      Radio Shack has now climbed to an EV/Revenue ratio of 1.0.

      And typically the formula he likes includes a heavy dose of real estate he can dish off as he's milking an ever declining cash flow.

      Radio Shack has no real estate.

      Also in regards to that silly Altucher article today where he says its not only him that see's this as a possibility but none other than "Jim Cramer" also see's it... ohhhhhhhhhhhhhhhhhhhh, wow. Jim Cramer. Must be.

      Yeah and he does also hesitate to check any of his facts. He claims how renowned value investor Bob Olstein is a big holder.

      Someone should at least check the basic facts before they put something in front of their audience.

      Just recently in a fortune article at http://money.cnn.com/2007/05/22/news/companies/pluggedin_birger_radioshack.fortune/index.htm
      we hear about Olstein's postion - "If Dell does make a bid for RadioShack, Olstein will be more bystander than beneficiary. Convinced the easy money has been made, Olstein began paring back his RadioShack position as the stock approached and then passed $30 a share. (It's now $31.)

      What's Olstein doing with his RadioShack profits? Buying up shares of another much-hated stock, of course

      • 1 Reply to grinninbrit71
      • Close Competitors TTM Sales $Mil Market Cap $Mil
        RadioShack 4,610 4,591
        * Best Buy Co. 35,934 23,515
        * Circuit City Stores 12,430 2,956

        * Morningstar Analyst Report Available | Compare These Stocks

        Data as of 02-28-2007

        Strategy

        RadioShack is undergoing a strategic shift. It is increasing its focus on the wireless business, and plans to change its inventory mix to emphasize consumer electronics at the expense of slower-moving (but higher-margin) product categories. It has already closed a significant number of underperforming stores, while rolling out more stand-alone kiosks for selling wireless handsets and related products.

        Management & Stewardship

        Corporate governance is above average, in our opinion. We think that the board acted in shareholders' best interests when it moved to replace CEO David Edmondson after it was disclosed that he misrepresented his educational credentials. Current CEO Julian Day has a reputation as a turnaround expert, based on his stints at Safeway SWY and Sears SHLD, and his compensation package is structured so that it will reward a successful turnaround. Management's compensation appears reasonable to us, but management and director ownership looks a bit light at just 4% of outstanding shares. We think the company's change-in-control provisions are a bit excessive, and we are disappointed that the firm no longer splits the chairman and CEO roles.

        Profile

        RadioShack operates about more than 6,000 stores (about 4,500 company-owned and 1,500 franchises), and nearly 800 kiosks selling wireless phones. Stores carry electronic parts and accessories, home electronics, computers, telephones, toys, and other products. RadioShack stores average about 2,500 square feet. The company manufactures some of its products and provides repair services for its own and third-party products.

        Growth

        Revenue growth has been erratic, and although management has plans to spur growth, it is still tough to imagine the company growing much faster than the economy over the long term, given its large store base and the intense competition it faces.

        Profitability

        Historically, the firm has had better net margins and returns on equity than its peers, thanks to its high-margin parts, batteries, and accessories business. A push into consumer electronics is likely to pressure gross margins.

    • easy answer... hedgies want to pump it up again..bunch of news to make this go higher. they want to eradicate all shorts. that's the only catalyst. rsh longs run out of reason to buy this name at this price..

      the fundamental doesn't matter. too many shorts..
      it's easy to push the price up here. funny... how rationale doesn't work.

      shorts just have to be patient...

      • 1 Reply to tonyforgoog
      • Sqeezing the shorts is always a strategy for some but it is a short lived plan. In fact, there comes a time when it is counter productive to drive the price higher without the fundamentals to back it up. There are only 23 million shares short out of 135 million shares. That means 17% of the funds could get lucky by driving the price up to sqeeze the shorts while the other 83% of the longs fight for peanuts because they can't find buyers at these elevated price levels. So really the game is now between longs .. which ones will get out and which ones will be left holding the bag with their jaws open wondering where their gain all went.

 
RSH
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