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Oppenheimer's Brian Nagel says RadioShack's (RSH +1.9%) dividend is at risk of getting slashed...

Oppenheimer's Brian Nagel says RadioShack's (RSH +1.9%) dividend is at risk of getting slashed or even eliminated as the company faces a cash crunch. At its current trading price, RSH trades with a gaudy 11.76% yield.
Comments (6)
  • Tim Cunningham
    , contributor
    Comments (66) | Send Message
     
    James Gooch has re-iterated several times that they intend to pay the dividend and is a top priority for shareholder value. April Sales were strong at RadioShack. This Oppenheimer analyst is protecting his firm's large short position in the stock.
    19 Jun 2012, 01:50 PM Reply Like
  • boulderpaul
    , contributor
    Comments (3) | Send Message
     
    Cash crunch? Their cash flow statement shows they can last 5 years at the current rate of cash burn.
    19 Jun 2012, 03:03 PM Reply Like
  • Hobski
    , contributor
    Comments (33) | Send Message
     
    The company hasn't started burning cash yet. That's not the point. They will most likely start burning cash soon. How much they burn and when (if?) can they reverse it is the question. Clearly, management has no insight. Otherwise the stock wouldn't be trading where it is.
    19 Jun 2012, 04:20 PM Reply Like
  • Tim Cunningham
    , contributor
    Comments (66) | Send Message
     
    When Management bailed on the stock buy back, short sellers were able to pound it into the ground. I am surprised private equity or Best Buy (BBY) hasn't offered up to buy the company at these levels. There is a big mistake on message boards stating that RadioShack is another Circuit City. This couldn't be further from the truth. RSH has a solid balance sheet, whereas Circuit City was mired in debt. RSH has small stores, whereas Circuit City had huge box stores that became obsolete.
    19 Jun 2012, 04:27 PM Reply Like
  • traderrvic
    , contributor
    Comment (1) | Send Message
     
    Mr. Cunningham, You are spot on in your assessment of Radio Shack, not only are they not "burning" cash as some short sellers like Mr. Nagel would have you believe, but in fact they increased their overall cash position during Q1 from $592 millions to $594 millions. Radio Shack has an extremely strong balance sheet even without the $450 million LOC that they have yet to touch. Knowing that Oppenheimer does indeeed have a large short here makes me wonder if they are begining to feel like they painted themselves into a corner, certainly Mr. Nagels comments go well beyond talking up ones own book and border on fearmongering, dangerous territory for a licenced individual.
    19 Jun 2012, 11:57 PM Reply Like
  • 427541
    , contributor
    Comments (23) | Send Message
     
    Kudos to Mr. Cunningham and traderrvic for pointing out the manipulation on the part of Oppenheimer. RSH, though it is troubled, has dropped so much in price the question is 'how low can you go?' - not much more. If it gets scooped up by another company, that's an automatic win for anyone holding the stock. Everyone knows Radio Shack, and it's a convenient contrast to the over-big circuit city and best buy stores when you just want a quick cord or accessory.
    20 Jun 2012, 05:22 PM Reply Like
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