- With RadioShack trading at a tiny fraction of sales and near book value, investors may be tempted to bet on a turnaround.
- Cost cutting is limited by a credit agreement that prevents RadioShack from closing more than 200 stores. Operating costs are now nearly half of the company's revenue.
- Sales are collapsing, and costs cannot be cut fast enough for RadioShack to avoid bankruptcy.
- Book value is plummeting, and the liquidation value is likely already negative due to large amounts of inventory. Equity investors will be wiped out in the event of bankruptcy.