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Martin Vlcek
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Martin Vlcek is a full-time investor and analyst who has been actively investing and managing money for more than 15 years. Martin has an Economics degree and he is currently a CFA program Level II candidate. His primary investment focus is on undervalued stocks with favorable risk-to-reward... More
  • Out-Of-The-Box Thinking On RadioShack 0 comments
    Aug 13, 2014 10:04 AM | about stocks: GPRO, RSH

    This article, unlike my other articles, is meant to be for entertainment purposes only as it contains some crazy, out-of-the-box ideas and comments for RadioShack (NYSE:RSH)'s management which may offend some readers or bring no investing value to them.

    Let me offer some out-of-the-box ideas for the desperate RadioShack management that has been short on good turnaround ideas besides closing half of its stores, which goes against the current debt covenants. As my contrarian investor side was hungry to take a closer look at RadioShack and buy some RSH call options (my maximum loss is ~$700 if RSH goes bankrupt, and I consider the investment as a lottery ticket, a gambling and not investing), my former marketing side is hungry to give some advice to the struggling RSH marketing department.

    Some crazy, out-of-the-box ideas for RadioShack's management

    Please, just no more Super Bowl ads with the customer proposition so terrible, competitive edge close to zero and products commoditized. RadioShack has almost nothing to lose at this stage, so getting crazy might just be the thing that revives and repositions the brand and perhaps saves the company.

    On a bit ironic note, if nostalgia is what RSH is about, why not change it into a museum of old technology? RSH could even keep the current inventory. It will be obsolete within two years and become museum items. Add some education value, such as that people can dismantle the devices and see what's inside. RSH's new Fix It Here service of same-day mobile phone repair is a start, but doesn't give the power to users to play with the devices. I don't know who would pay for that, but it's an idea. But I like the next idea much more:

    Why repair it? Destroy it instead and buy a new one! Seriously, create a smashing corner - call it "SmashingShack" - where stressed out managers and general population can buy obsolete devices for pennies and smash them with a huge hammer, or destroy them whichever way they want, etc. You get the idea. Create some buzz and get free publicity instead of buying another Super Bowl ad. Give people helmets for protection, but with the GoPro (NASDAQ:GPRO) cameras attached (get some money from GoPro for this deal in the process). Let people post GoPro camera videos of themselves smashing things in your shops. GoPro is the new kid on the block that wants to show off, so it would be a win-win deal.

    People could even bring their own devices to destroy. That's what I call a true "Bring Your Own Device" (BYOD) policy. BYOD is a good buzzword, would look great in those PR messages. You actually just invented a brand new buzzword - Destroy Your Own Device (DYOD). Talk about being a trend-setter.

    And customers bringing in their own devices to destroy - that's what I call a real slashing of costs of goods sold (COGS) and great Just-In-Time management, or outright zero-inventory management. And while you are at it, change the company name to RadioShock from RadioShack. It would go well with the marketing changes I propose and communicating a real change. The ticker should be SHOCK, or SHCK.

    The billing model should be based on a pay-as-you-destroy basis, with paying for each device, or paying for time if you bring your own device. In addition, for power consumers, RadioShock should offer an all-you-can-destroy billing option, with a flat fee for 15 minutes with unlimited number of inventory destroyed.

    Again, I will point out that this article should be really considered for entertainment purposes only, but I stand behind my idea of the SmashingShack. The company should at least try it. They have nothing to lose, they need to make a splash and need to liquidate lots of inventory.

    Disclosure: The author is long RSH. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: I own a small, speculative long position in RSH through long-dated options. My total loss if RSH went bankrupt would be $700.

    Themes: long-ideas Stocks: GPRO, RSH
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