RadioShack Profits Up On Wireless Sales - InformationWeek

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Infrastructure // PC & Servers

RadioShack Profits Up On Wireless Sales

Sales of wireless handset at the electronics retailer surged more than 60% in the first quarter.

RadioShack 's strategy of de-emphasizing its traditional line of do-it-yourself cables, connectors, and batteries in favor of sales of mobile phones and services continued to pay off in its first quarter as the firm reported a 16.2% jump in earnings and a 4% increase in sales.

The report, announced after the close of stock trading Monday, was paced by prepaid wireless handset sales that surged more than 60% in the first quarter compared to the first quarter of 2009. The overall wireless business rose 49% in the same period.

Julian C. Day, RadioShack 's chairman and chief executive officer, has been guiding the firm into the heart of the growing wireless universe. He even has moved to change the name of its stores from "RadioShack " -- a reference to the old communications shack on ships -- to "The Shack."

Profits in the first quarter were $50.1 million on sales of $1.04 billion. The recent success of the company and its wireless strategy have led Wall Street stock analysts to suggest it is a ripe candidate to be acquired.

"Our performance this quarter highlights the success of our strategy to increase our focus on mobility, connectivity, and innovative products and services," said Day in a statement, adding that the company plans to continue its "progress in brand building and delivering a consistent, high-quality, customer experience."

RadioShack has embraced the mobile phone business with a vengeance, stocking its stores with phones and deals from major carriers like AT&T and Apple's iPhone to Verizon Wireless and T-Mobile. The retailer recently lost its Sprint-operated kiosk sales as Sprint moves to its WiMax nationwide network, but Sprint Nextel prepaid plans helped to cover the kiosk loss. RadioShack also added T-Mobile as a third postpaid carrier.

Five years ago, RadioShack was faced with a dilemma when Verizon ended its partnership with the electronics retailer. RadioShack then forged new relationships with Sprint, T-Mobile, and AT&T with the last-named bringing its exclusive marketing deal for the iPhone. In recent months, even Verizon came back with a small partnership deal.

On the negative side of its earnings report, RadioShack said sales of its digital converter boxes plunged to $10.6 million from $72.4 million in the same quarter last year.

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