Syrianext said "nice to know that the CEO reaffirmed the 7% dividend the other day!"
He felled for the most common trap of a company in trouble. Great article on Forbes proves it.
dividend payments become hush money–big payments intended to keep shareholders quiet about big problems. RadioShack’s annual dividend crossed into hush money territory in October when it doubled it ahead of a disturbing fourth quarter earnings report. On Tuesday, we learned that first quarter earnings are likely to be worse. Radio Shack is plagued by low profit margins on the mobile phones that seem to be about all these small-box electronics stores can sell these days. With competition from the phone companies themselves popping up like dandelions around every Radio Shack, it’s hard to picture a happy recovery any time soon.
But then again, what would one expect from a man that recommends his own posts and gets his information from store managers.
The Forbes article is nothing new, certainly. I think all would agree that without substantive change, RSH will be unable to maintain its dividend for an extended period.
However, I'm convinced they are actively marketing themselves, and as such, will do whatever it takes to maintain the dividend until (and if) such time as a buyer manifests itself.
I won't sugarcoat anything. This is a company in deep trouble and with what I consider very poor retail management. Having said that, there is considerable intrinsic value in a large, established small format chain - not anywhere close to the $24 some tout - but $10.....possible.