3. RadioShack's Reflections
Somebody better put a mirror in front of the folks at RadioShack (RSH). Not to check whether the company is still breathing (okay, well that too), but to show the executive team exactly who is responsible for the electronics retailer's problems.
Shares of RadioShack got smacked Tuesday sinking 30% after the gadget seller gave a below-consensus profit outlook for its fiscal fourth quarter because of margin weakness stemming from its Sprint (S) business.Fort Worth, Texas-based RadioShack now sees earnings of 11 to 13 cents a share for the December-ended period on sales of $1.39 billion, well below the current average estimate of analysts for a profit of 37 cents a share on sales of $1.35 billion. It plans to report full-year results Feb. 21. RadioShack CEO Jim Gooch attributed its sub-par performance to "underperformance of the Sprint postpaid wireless business" and said the results "reflect further unanticipated changes in Sprint's customer and credit models." Oh come on Jim. That's just wrong. Sprint has enough problems of its own right now without you throwing it under the bus ... and then backing up over it for good measure. The company is in a losing battle with Verizon (VZ) and AT&T (T) and is bleeding money, so you might as well leave it alone to hemorrhage in peace. Hey, isn't that the kind of respect you would want if -- or perhaps when -- RadioShack goes the way of Circuit City, The Wiz, and Crazy Eddie's? Ouch! Okay that was harsh. But still, Gooch should remember that it was his decision, not Sprint's, to buy back shares and maintain a lofty dividend in the fourth quarter, instead of using that cash to spruce up stores or switch strategies. Moreover, RadioShack's lackluster product mix and heavy holiday discounting were of its own choosing. Put it all together and you can see that investors are sprinting away from his choices, not Sprint's. Maybe Gooch should reflect on that next time he looks in the mirror.
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