RadioShack (RSH) Shares Short Circuit on Q4 Warning, Blames Sprint (S)
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Price: $0.24 --0%
Financial Fact:
Operating income: -114.1M
Today's EPS Names:
ESCA, LICT, NKSH, More
Financial Fact:
Operating income: -114.1M
Today's EPS Names:
ESCA, LICT, NKSH, More
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Shares of RadioShack Corp. (NYSE: RSH) are trading down 19 percent in the after-hours session Monday following the release of preliminary fourth-quarter results and news the Board has suspended the buyback program.
The company said quarterly revenue was up 6 percent to $1.39 billion while comparable store sales for company-operated stores increased about 2 percent. The Street’s consensus calls for $1.35 billion in total sales.
Diluted earnings per share for the quarter are expected to be in the range of $0.11 to $0.13, compared to $0.51 per diluted share reported in the 2010 fourth quarter. The Street is forecasting earnings of $0.37 per share.
RadioShack said the results for the fourth quarter are due in large part to the underperformance of the Sprint (NYSE: S) postpaid wireless business and reflect further unanticipated changes in Sprint's customer and credit models. These changes resulted in fewer new and upgrade activations and a decline in Sprint postpaid revenues in the fourth quarter compared to the 2010 fourth quarter and compared to third quarter 2011. In addition, fourth-quarter results reflect a highly promotional holiday season and ongoing pressures on consumer spending.
"Our transition continues as we work to maximize our mobility business opportunities, particularly now that our assortment includes the top three national wireless carriers," said Jim Gooch, president and chief executive officer. "In that regard, we continue to make progress in the mobility sector with growth in sales of new iconic handsets, incremental sales growth from new partner Verizon Wireless, higher revenues from AT&T, and higher sales of tablets and e-readers. However, we are disappointed that these positives were overshadowed by significant declines in our Sprint business.
"We recognize that certain smartphones and other mobile devices, mainly tablets and e-readers, are a growing mainstay of consumer electronics purchases, and are significantly changing the margin profile of our mobility business. With this in mind, we are resetting our business expectations for 2012. We remain confident in the health of our business absent the Sprint impacts and in the progress we have made on initiatives put into place in 2011. Our plan in 2012 is to build on this progress. Our key initiatives include strengthening our relationships with our wireless carrier partners as we continue to grow our mobility business, make further enhancements to our store and online experience, and optimize our overall selling and merchandising strategy."
Gooch concluded, "We have also decided to suspend share repurchases for the near term, and to instead continue to reinvest in our business and return value to shareholders through our quarterly dividend. Our strong balance sheet and substantial liquidity, supported by our cash position and credit facility, provide ample flexibility and support for these investments. With capital spending this year estimated in the range of $70 million to $90 million, we expect to deliver modestly positive free cash flow in 2012. Looking across the year, assuming the Sprint business remains at its current run rate, we look for 2012 net income to be down compared to 2011, with very challenging comparisons in the first quarter and sequential quarterly improvement in the remainder of the year."
The company said quarterly revenue was up 6 percent to $1.39 billion while comparable store sales for company-operated stores increased about 2 percent. The Street’s consensus calls for $1.35 billion in total sales.
Diluted earnings per share for the quarter are expected to be in the range of $0.11 to $0.13, compared to $0.51 per diluted share reported in the 2010 fourth quarter. The Street is forecasting earnings of $0.37 per share.
RadioShack said the results for the fourth quarter are due in large part to the underperformance of the Sprint (NYSE: S) postpaid wireless business and reflect further unanticipated changes in Sprint's customer and credit models. These changes resulted in fewer new and upgrade activations and a decline in Sprint postpaid revenues in the fourth quarter compared to the 2010 fourth quarter and compared to third quarter 2011. In addition, fourth-quarter results reflect a highly promotional holiday season and ongoing pressures on consumer spending.
"Our transition continues as we work to maximize our mobility business opportunities, particularly now that our assortment includes the top three national wireless carriers," said Jim Gooch, president and chief executive officer. "In that regard, we continue to make progress in the mobility sector with growth in sales of new iconic handsets, incremental sales growth from new partner Verizon Wireless, higher revenues from AT&T, and higher sales of tablets and e-readers. However, we are disappointed that these positives were overshadowed by significant declines in our Sprint business.
"We recognize that certain smartphones and other mobile devices, mainly tablets and e-readers, are a growing mainstay of consumer electronics purchases, and are significantly changing the margin profile of our mobility business. With this in mind, we are resetting our business expectations for 2012. We remain confident in the health of our business absent the Sprint impacts and in the progress we have made on initiatives put into place in 2011. Our plan in 2012 is to build on this progress. Our key initiatives include strengthening our relationships with our wireless carrier partners as we continue to grow our mobility business, make further enhancements to our store and online experience, and optimize our overall selling and merchandising strategy."
Gooch concluded, "We have also decided to suspend share repurchases for the near term, and to instead continue to reinvest in our business and return value to shareholders through our quarterly dividend. Our strong balance sheet and substantial liquidity, supported by our cash position and credit facility, provide ample flexibility and support for these investments. With capital spending this year estimated in the range of $70 million to $90 million, we expect to deliver modestly positive free cash flow in 2012. Looking across the year, assuming the Sprint business remains at its current run rate, we look for 2012 net income to be down compared to 2011, with very challenging comparisons in the first quarter and sequential quarterly improvement in the remainder of the year."
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