Seeking Alpha

UBS: RadioShack turnaround doubtful

  • UBS analyst Michael Lasser calls a turnaround at RadioShack (RSH -3.8%) highly doubtful.
  • He says the limited financial capabilities of the company undercut its potential to innovate properly.
  • The current approach by RadioShack management is akin to throwing things against a wall to see what sticks, notes Lasser.
  • UBS has a $0.50 price target on RSH.
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Comments (14)
  • U2A Ventures
    , contributor
    Comments (237) | Send Message
     
    RSH will be doing their Going out of Business Sale soon... but the question is who will be next? JCP?
    12 Aug 2014, 01:59 PM Reply Like
  • jzheng220wz
    , contributor
    Comments (132) | Send Message
     
    JCP? really?
    I think JCP is doing OK.
    12 Aug 2014, 02:13 PM Reply Like
  • rs8966
    , contributor
    Comments (108) | Send Message
     
    These Analyst's making $150k an year are having the time of their life giving opinions on RSH's demise. Analyst's are not rock stars but here with RSH being in difficult position they get there name published as if they are guru's. First it was the analyst from Stern Agee, then S&P, then Moody's and now UBS. No one cares about the name of the Analyst for healthy companies so these losers get their glory by bashing a struggling company like RSH.

     

    Meanwhile the real guru's, the millionaires and billionaires, Standard General and Litespeed Management continue to back RSH. These are the real guru's, the entrepreneurs and wealthy folks, not the Analyst's working 60 hours a week at a brokerage.
    12 Aug 2014, 03:27 PM Reply Like
  • markcc
    , contributor
    Comments (1354) | Send Message
     
    rs8966, RSH burned through $240+ million in cash in the first quarter, is projected to lose over $300 million this year and has $63 million in cash left at the end of the last quarter. Its not the analyst, its the math. Its over.
    13 Aug 2014, 02:07 AM Reply Like
  • beajedi
    , contributor
    Comments (79) | Send Message
     
    you can't play both sides of the fence where you can *hope* that some banker will get off their butt and bail out RSH with a several hundred million dollar cash infusion, but then dismiss bankers that predict RSH's demise.

     

    as much as some of these guys have invested into RSH, they can afford to take a loss. I cannot take a loss with my retirement on the line.
    13 Aug 2014, 03:20 AM Reply Like
  • rs8966
    , contributor
    Comments (108) | Send Message
     
    Well the cash infusion will only likely happen if RSH reduces it's losses significantly. I am just saying that bankers would love to make a 10% loan if RSH can show that it is not going to be bankrupt. For that the losses will need to come down by half or more.

     

    Regarding the Analyst who caused a 11% decline, let's face it if the analyst made the same comment about a Facebook or a Ford people would ignore it. Only with a RSH or Aeropostale do they get this respect. These Analyst's have never run a company or a hedge fund. They are just some young guys with an ivy league MBA and CFA who think they are qualified to say a company is dead and cannot make a comeback. I see them as punk's and not guru's. If they were that smart to predict the future they would be running their own company and not working 60 hours for a brokerage or rating agency and spending their year obsessing about annual performance review and bonus.
    13 Aug 2014, 09:50 AM Reply Like
  • dsandrowitz
    , contributor
    Comment (1) | Send Message
     
    Based on simple math, it is easy to say RSH is dead. And yet they are still here. Cash is clearly an issue, but there is a lot of credit left that can be drawn down on. RSH is likely going to limp along for a few more quarters, waiting for bankruptcy and hoping for a savior. I wouldn't buy at this point, but there will be some money to squeeze out of this stock before it is all over.
    13 Aug 2014, 10:05 AM Reply Like
  • vikramnjnjjdjnd
    , contributor
    Comments (1018) | Send Message
     
    Soon to be delisted. Same song as circuit city.
    13 Aug 2014, 10:42 AM Reply Like
  • beajedi
    , contributor
    Comments (79) | Send Message
     
    Its not the analyst that caused the 11% decline-- its moreso the traders. You're right, a lot of it IS just noise, but at the same time its the traders that freak out. I don't know whats going to happen in the short term-- if the same analyst says "eh its not as bad as I thought" and traders buy up the stock to 2 dollars, great!

     

    But i don't think that really changes the fundamentals of the business.
    13 Aug 2014, 03:50 PM Reply Like
  • rs8966
    , contributor
    Comments (108) | Send Message
     
    The timing of the Analyst is suspect. The analyst's are supposed to do their upgrades and downgrades after earnings are announced or a "material" event happens which can effect earnings going forward. In the case of RSH there is no material news since last earning two months ago. These analyst's from Moody's and UBS are randomly giving "RSH will go bankrupt prophecies" like they are Warren Buffet or someone great lol and getting good press. If RSH goes bankrupt they will have the "I told ya" wise man swagger and if it survives, they still keep their $150k or $200k job.
    14 Aug 2014, 10:09 AM Reply Like
  • markcc
    , contributor
    Comments (1354) | Send Message
     
    rs8966, Who made that rule? Analysts typically issue and modify opinions daily and stock prices and events and lack of events happen all the time. In this case there is the lack of an event that is most concerning. I am not aware of any restriction of when an opinion can come out.
    14 Aug 2014, 12:14 PM Reply Like
  • rs8966
    , contributor
    Comments (108) | Send Message
     
    Markcc - There is no rule but I am just thinking out loud what made the analyst wait two months to give his opinion? This is not a SA analyst we are talking about, these are Moody's and UBS analysts. Were these analysts sleeping earlier or on drugs? lol Why did they suddenly wake up and come out with these god like prophecies?

     

    I am just being cynical but maybe they have an axe to grind, they did not want their opinions to get crowded with 10 others. Now they out solo when RSH is down and they get so much attention with their name written like rock stars and the stock price falling over 10% in a day. It makes them exciting celebrities rather than one of the many boring analyst's working 60 hours desk job in formal attire in a NYC sky scraper.

     

    Lack of events is concerning? I don't agree, I think its encouraging. No lay off's announced, or noise about store closings, or CEO getting fired, Magnacca even got nominated to American Apparel board by Standard General. It makes me wonder why there is so much peace when the house is burning, maybe Q2 is better. We will find out in three weeks.
    15 Aug 2014, 12:23 AM Reply Like
  • markcc
    , contributor
    Comments (1354) | Send Message
     
    rs8966, this is a falling knife, the analysts are like reporters, they want to have the biggest splash for their readers. At the current low market cap, I am not sure anyone is reading this because there is not enough market cap left. Definitely not enough market cap for a refinancing or anything to save these guys. Standard General may have a bunch of young guys too much "in love" with previous decisions to see things clearly and let go. I realize the hopelessness of the situation and am waiting for the bankruptcy headline. Guys like Magnacca are good, but even the best guys get dealt a bad hand sometimes.
    15 Aug 2014, 03:09 AM Reply Like
  • beajedi
    , contributor
    Comments (79) | Send Message
     
    http://linkd.in/1mPpMQz

     

    well, there's the analyst's linkedin information, for better or worse.

     

    As for earnings, its kind of hard to say. Radioshack has like 4000 stores, so closing 200 stores would mean narrower losses of about 5%. I'm also assuming that they'll be a slight increase in capex with the concept stores-- I'm interested in seeing what the margins are from the "double digit increases"

     

    But again, even if the number of concept stores doubled in this next quarter from 38 to about 75, i don't see how much it would be able to move the needle with 4000+ other stores that need to be renovated still.

     

    All in all, if they post narrower losses by 7%-10%, I say its a step in the right direction. But even then, that'd mean reducing losses from ~100 million a quarter to 90 million a quarter.
    15 Aug 2014, 01:45 AM Reply Like
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