RadioShack Short-Circuits - TheStreet



became the latest casualty Friday of an increasingly sick electronics retailing sector.

The company lowered its estimate of first-quarter earnings from its previous range of 39 cents to 41 cents a share, saying they're more likely to be 30 cents to 34 cents a share. It also warned about its outlook for the year, which currently targets a range from $2.34 to $2.40 a share. RadioShack expects to update the number when it reports quarterly results on April 19.

"Business trends have underperformed our expectations," the company said. "This has been driven by a recent deceleration in wireless sales in our core stores and, to a smaller extent, underperformance in our battery business."

On a conference call with analysts that followed the announcement, the retailer stressed that execution problems led to the disappointment.

RadioShack noted, for instance, that family plans account for a much smaller slice of its wireless business than elsewhere in the indsutry, giving the company an opportunity to improve. Harris Nesbitt analyst Rick Weinhart said there probably are opportunities for improvement for RadioShack, but some of the weakness reflected in the company's report is the latest sign that a slowdown in consumer electronics is at hand.

"Higher gas prices and other economic factors are weighing on consumers, and at the same time, we don't have a really robust product cycle outside of digital TVs, and I think the prices on those are still a little high for the average consumer," Weinhart said. "There are some hot products out there for sure, like the iPod, but I think some other categories are showing a lot of weakness, like PCs."

Weinhart slashed his estimates for electronics retailers across the board last month, and since then, the sector has been hit by a string of downgrades from others on Wall Street. In early March,

Circuit City

(CC) - Get Report

reported its same-store sales dropped 1.8% in the fourth quarter and said declining wireless sales accounted for a significant amount of the shortfall. It also noted a decrease in digital-video service sales and PC sales.

That news followed an ominous warning from

Best Buy

(BBY) - Get Report

. The industry leader, Best Buy reported slower sales growth in its fourth quarter and said earnings for the period will likely be at the low end of or below its previous forecast, due to a more promotional environment and an increase in inventory markdown. Circuit City and Best Buy will report quarterly earnings on March 30.

Shares of RadioShack were recently down $2.51, or 9.1%, to $25.20.