Radio Shack shares slide on Q4 profit warning, Sprint gets the blame

Radio Shack shares slide on Q4 profit warning, Sprint gets the blame
Blaming disappointing results from Sprint's post-paid business, Radio Shack announced after the closing bell on Wall Street, that it will report much lower than expected Q4 earnings. The retailer said that it had fewer new activations and upgrade activations due to policy changes at the carrier. Revenue from Sprint's post-paid customers declined both year-over-year and sequentially. Radio Shack now expects fourth quarter revenue of $1.39 billion, ahead of the Street's 1.35 billion estimate. But earnings per share will come in at 11-13 cents, much lower than the Street's prediction of 37 cents a share.

Same store sales were up 2%, but gross margin in the period should come in at 35%, down from the 41% reported last year. The decline in margin comes from a change in the mobility products being sold as buyers gravitated toward lower margin smartphones and mobile devices. Besides blaming Sprint's post-paid business, Radio Shack also noted that "further unanticipated changes in Sprint’s customer and credit models" had an impact on revenue.

Radio Shack isn't passing the hat around just yet. At the end of the quarter, it had $590 million in cash, up $21 million from the 2010 quarter. It also has $421 million available to draw down on a $450 million revolving credit facility. Still, in order to continue paying dividends and invest in the business, Radio Shack will stop share repurchases.

Radio Shack shares are down 20% after-hours to $8.21.

source: Forbes



1. hobble

Posts: 130; Member since: Oct 11, 2011

Target mobile however is doing pretty decent :)

2. belovedson

Posts: 1061; Member since: Nov 30, 2010

radioshack has crap deals for phones. amazon tops them walmart even tops them there are smaller lesser known companies that offer much better deals on phones than radioshack, so whats the point

5. -box-

Posts: 3991; Member since: Jan 04, 2012

That and the reps aren't that well informed nor willing to work much with comparisons

8. ECPirate37

Posts: 349; Member since: Jul 14, 2011

Agreed. I remember 15 years ago if you had a question about anything, Radio Shack was the place to go. I went there a couple of weeks ago to see if they carried 32 gig Micro SD cards, and what the price was. The girl behind the counter said they did not. I then asked how much the 16gig cards cost and she said they did not carry those either. I pointed at the cards behind the counter and said, "You do, it is the ones that say 16gig on them". She turned around and seemed surprised. However, I do go there to get my new phones through Sprint because they do the Trade-ins of old phones. I only paid $100 for my EVO 3D the day it came out because I got $100 from my old one. That was a great deal.

10. Astreo

Posts: 105; Member since: May 05, 2011

Maybe yours arent well informed by i have NEVER had a single person come into my store and prove me wrong on anything that had to do with mobile devices. speaking as an assistant manager at one of the shacks.

11. Astreo

Posts: 105; Member since: May 05, 2011

walmart has never had better deals than radioshack. ever.

12. belovedson

Posts: 1061; Member since: Nov 30, 2010

yes they have.


Posts: 11; Member since: Jan 11, 2012


4. Slammer

Posts: 1515; Member since: Jun 03, 2010

I'm not going to discredit RS for bringing up Sprint's policy changes. It is what it is. However, logistically speaking, Sprint is trying to better their business model from being viewed as that inexpensive run of the mill carrier that they were tagged with after the Nextel fiasco. When they make this move, individuals view them as expensive money hoggers. Yet, they are still less expensive than AT&T and Verizon. Individuals need to make up their minds whether they want expensive service or inexpensive. Sprint can't give away the house. They need to run a business. John B.

6. oddmanout

Posts: 443; Member since: May 22, 2009

I used to like radioshack but I will never buy from that store again. The employees are so commission hungry its not even funny. Not to mention none of them know what the hell they're talking about. No I don't want any accessories, no I don't want any batteries, and no I don't want your pointless protection plan! If they spent half their time learning about its products as they did harassing its customers to buy more, maybe they would get somewhere. I doubt its like that everywhere but the 3 radioshack stores here in Pittsburgh are complete jokes. This news comes as no surprise to me.

16. stealthd unregistered

You sound like you've never worked a retail job before.

7. oueighteen95

Posts: 26; Member since: Dec 20, 2011

RadioShack has shot themselves in the foot, I worked for them for almost 3 years starting as a part time sales associates and ending as a store manager. They don't market themselves, they don't stock their stores with the merchandise, and they don't let their store managers advertise their own store even though the upper management preaches on "run your store like its yours". They built my store 500ft from a BEST BUY in the same parking lot and right next door to a target and they gripe at me for not meeting sales goals. Its not Sprints fault, when RS dropped TMO and picked up Verizon, they promised Verizon that they would move a undisclosed number of phones a month, well that didn't happen. Stores that didn't sell at least a Verizon phone a week had to be on "special" conference calls to explain why lol. RS has one foot in the grave and one foot kicking dirt in, they won't be around to much longer.

9. CapedCrusaderRobin

Posts: 32; Member since: Dec 19, 2010

RS is so desperate to prove that they are the premier wireless retailer that they were even counting verizon prepaid as new activations as well. Its sad that their main emphasis for selling is only focused on postpaid activations of any carrier. to force their sales peoples to sell more phones is to cut hours down to the point where a full timer becomes a part timer so this they are forced to sell phones out of the yin-yang to make up the loss of money of cut hours in the form of commissions. Now they see they are in trouble and are blaming their woes on Sprint. Sprint has been in RS for a long time and now they pull this crap. All this stems from upper management screwing over the little guy. ~ former RS manager as well.

13. downphoenix

Posts: 3165; Member since: Jun 19, 2010

well we blame Radioshack reps on telling customers they can call us to get their activation fee (wrong), they frequently don't educate customer on charges like the act fee and premium data fee on smartphones, frequently screw up plan setups for customers so they are overcharged, etc. and they cause a lot of returns and give customers a bad impression of Sprint, even though they are the ones at fault. You gotta take it if you can dish it Radioshack. Im surprised that company is still in business with how poorly they manage their stores and their wireless program.

14. agamhonda

Posts: 14; Member since: Oct 11, 2011

Let correct a lot of you people on here. First off Sprint did shoot Radio Shack in the foot by taking away the 1 year upgrade capability.This was obvious done because of the iPhone. Anyone can look use logic and realize that would cut sales in half or more. This is what Radio Shack is talking about. Also about Radio Shack having the lowest price. They usually have the lowest prices, but walmart will make the price a penny cheaper just to say they have the lowest price. This is why Radio Shack just started lowest price guarantee. You do have to ad when you come into the store. Amazon does have lower price than Radio Shack, but they are not paying anyone to do the work. They are just filling order. Hello that is why we have online business to cut cost. Radio Shack can improve their number like someone else said by putting more accessories in the store. The person complaining about not wanting a batteries, accessories or protection plan. If you want to be clerked go to walmart.

15. m.garz

Posts: 61; Member since: Oct 08, 2010

you're the guy that sold me the batteries! rofl

17. jerry.english

Posts: 3; Member since: Feb 01, 2012

Radio Shack, I work for a franchised dealer exclusive to Sprint. You have a store right down the street from me. Companies change their policies all the time. Sprint removed early (and yes they were EARLY) to be able to afford the subsidy costs associated with carrying the iPhone. Yes, it is all a result of carrying the iPhone, which is something our customers wanted. We are not the first carrier to do away with this type of an early upgrade program, and I know that you also sell phones for those other carriers who changed those policies before Sprint did. Rather than focus on blaming Sprint, I urge you to focus instead on how you service our Sprint customers. Your stores (including the one down the street) constantly misinform customers and set up their accounts incorrectly. Do you know what a Cellebrite device is? Apparently you don't, because you always send your customers to our Sprint stores to have their device data migrated to the new phone that you just sold them. You send people here for all kinds of crazy things, most of which you are capable of handling yourselves. If you improved your customer service experience when you are selling our products and services, you might sell a lot more of those phones that you offer for cheaper than we do in our company stores! I know I, for one, am tired of fixing your screwups!

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