On Thursday, RadioShack Corporation (NYSE: RSH) lost 7.07% for another bad day in what has been a bad several years ever since the rise of online sites (e.g. Amazon.com) along with mass retailers (e.g. Wal-Mart, Target etc.) which helped to bankrupt electronics retailer Circuit City Stores Inc (OTCMKTS: CCTYQ) and is giving some grief or uncertainty for Best Buy Co., Inc. (NYSE: BBY). But just how bad is it for RadioShack Corporation? Here is a quick summary of all the bad or potentially good news for the stock:
- A Financial Adviser May Be Called In. Thursday’s fall was triggered by trade publication Debtwire which quoted un-named sources who said that RadioShack Corporation plans to entertain pitches for a financial adviser in the coming weeks in order to find a way to fix its balance sheet as it faces a string of debt maturities ($216.4 million of convertible notes will come due on August 1), increasing cash burn ($434.9 million in cash is left along with $384.9 million under a credit facility) and bloated inventory levels (AlixPartners was apparently brought in last year to provide advice with inventory and distribution). Company spokesman Kirk Brewer was quoted in Reuters as saying:
"Like many companies, we have discussions with investment banks to help us evaluate ways to further strengthen our balance sheet and manage it efficiently. That has been the sole focus of these discussions."
- High Short Interest. According to HighShortInterest.com, RadioShack Corporation has short interest of 35.90% as of July 12th – making it the 10th most shorted stock on the NYSE according to that site’s data. Of course, these shorts can just as well be caught in a short squeeze should the stock rally.
- New Concept Stores or Configurations Are Being Rolled Out. RadioShack Corporation recently announced the opening of a new concept store located at 2268 Broadway at 81st Street in Manhattan's Upper West Side. The press release said the new store aims to “attract tech-hungry shoppers who will find a new level of products, service and excitement in a store that makes the buying experience fun.” Moreover and over the next several weeks, the company will open a variety of different store configuration prototypes in the New York metropolitan area along with the states of New Jersey and Texas. New store configurations will be customized based on locations, local buying patterns and neighborhood needs.
- A New CEO With a Turnaround Plan. In February, Joe Magnacca, who worked for drugstore chain Duane Reade before becoming an executive VP at Walgreens, joined the company as its new CEO and gave himself 100 days to put together a revival plan for the Board. RadioShack Corporation also ended an unprofitable mobile phone partnership with Target Corporation (NYSE: TGT).
- Share Performance. On Thursday, RadioShack Corporation fell 7.07% to $2.63 for a market cap of $262.17 million on very high trade volume of 24.81 million shares verses a daily average of 2.07 million. The stock is also up 24.6% since the start of the year, down 35.2% over the past year and down 79% over the past five years for a rather ugly long-term chart:
Here is the latest technical chart for RSH:
The Bottom Line. The good news for investors is that RadioShack Corporation appears to have a competent CEO now at the helm who has some sort of turnaround plan, but the bad news is that he may not have enough time to turn around the company. So stay tuned…