updated 08:36 pm EDT, Wed July 25, 2012
Stock trading at levels not seen since 1980
Consumer electronics retailer RadioShack reported an unexpected second-quarter loss and said it would stop paying stock dividends. In one day shares have fallen over 33 percent, and are trading at levels last seen in 1980. The stock is down 74 percent this year alone. The decision to suspend the dividend comes after the surprisingly weak earnings announcement coupled with an imminent debt maturity of $375 million due in 2013. Stopping the payment will save the company about $50 million per year.
Anthony Chukumba, an analyst at BB&T Capital Markets said, "RadioShack's financial performance went from bad to worse, we think the stock will be 'dead money' at best until current trends begin to show some sign of stabilizing."
"We have little confidence in RadioShack's ability to earn a profit stream given their (and our) inability to see this coming," Analyst David Schick from Stifel Nicolaus said. Schick's firm downgraded the stock to hold from buy after the loss announcement.
Second quarter 2012 GAAP net loss was $12 million, or a loss of 21 cents per share compared to a net income of $23.5 million from this quarter a year ago. Analyst estimates predicted an income of 3 cents per share. RadioShack holds $717.7 million of cash and cash equivalent. Total debt is $679.3 million, up $9 million from the end of 2011.