Radio Shack: Bankrupt at Last

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Radio Shack: Bankrupt at Last

Postby jon » Thu Feb 05, 2015 6:35 pm

RadioShack Files for Chapter 11 Bankruptcy After Striking Deal to Sell Some Stores
By Rebecca R. Ruiz and Michael J. de la Merced
New York Times
February 5, 2015 5:47 pm
Updated, 8:06 p.m.

For years, RadioShack — the retailer that helped bring personal computers to the masses — outlasted untold predictions that it would buckle in the face of bigger rivals and online competitors.

But its clock has finally run out.

RadioShack, a long-ailing 94-year-old electronics chain, filed for bankruptcy protection on Thursday after striking a deal to sell up to 2,400 of its stores to the wireless service provider Sprint and a hedge fund that is its biggest shareholder.

The Chapter 11 filing, made in federal bankruptcy court in Delaware, took few unaware. RadioShack had not turned a profit since 2011, and its fate had been a regular topic of speculation in the retail and corporate restructuring circles.

“The surprise is that they survived this long,” said Michael Pachter, an analyst at Wedbush Securities. “I didn’t think they’d last through Christmas 2013.”

But RadioShack is poised to live on, at least in much diminished form. Sprint and the hedge fund Standard General agreed to buy 1,500 to 2,400 of RadioShack’s 4,000 company-owned stores in the United States. Sprint is expected to run special “store within a store” departments in up to 1,750 of those stores.

As so-called stalking-horse bidders, Sprint and Standard General will have to compete with potential rivals in a court-supervised auction.

The remaining company-owned stores will then be closed.

Until then, RadioShack will continue to operate normally through the Chapter 11 process.

“These steps are the culmination of a thorough process intended to drive maximum value for our stakeholders,” Joe Magnacca, RadioShack’s chief executive, said in a statement.

The company’s roots suggest its origins in a long-gone world, taking its name from the small wooden shacks on ships that held radio equipment. Another predecessor, the Hinckley-Tandy Leather Company, sold leather shoe parts to cobblers.

But the retailer once stood at the vanguard of the technological revolution. In 1972, it sold an all-electronic calculator. And in 1977, it sold one of the first mass market computers, with an operating system designed by Bill Gates. It was later a pioneer in sales of early mobile phones and laptops.

But it has been roiled by the digital revolution, particularly with the rise of e-commerce, which has significantly diminished foot traffic to RadioShack’s thousands of brick-and-mortar stores. And sales of cellphones have slowed, giving rise to price wars and battering margins for third-party retailers like RadioShack.

It has posted losses for the last 11 consecutive quarters.

“The company has struggled to find its place in the market and, more important, with the consumer,” the retailer’s 2013 annual report read, calling the financial performance that year disappointing.

RadioShack hired Mr. Magnacca — a former president of Duane Reade, credited with having reinvented that brand before it was sold to Walgreen — as chief executive in 2013. In announcing the appointment, the company expressed hope that Mr. Magnacca would be a “catalyst for change” and resuscitate the company.

But the financial decline continued, despite new management’s efforts. Mr. Pachter of Wedbush pointed to a Super Bowl spot that RadioShack ran last year poking fun at the dated image of its stores and advertising that they had been updated.

The company’s single biggest problem, Mr. Pachter said, was its irrelevance. “Ask people under 30 what a radio is, and what a shack connotes,” he said. “It’s your grandmother’s store.”

In March, RadioShack said that it planned to close up to 1,100 stores but announced two months later that its lenders had overridden those plans. It wound up closing about 175 stores last year, the company reported in a quarterly earnings statement in December.

In jeopardy of running out of cash, the company scrambled to refinance its debt in the fall. Its biggest shareholder, Standard General — which also has a significant stake in American Apparel — stepped in to help. The fund provided $120 million in liquidity, which helped keep Radio Shack solvent for the 2014 holiday season and out of bankruptcy until now.

Standard General once again stepped in on Thursday.

Mr. Pachter said that RadioShack — which listed $1.2 billion in assets and nearly $1.4 billion in total debt — could still survive in a much smaller form. Many of its stores, in strip malls and lower-income areas, are well suited to selling prepaid mobile phones to customers with limited or poor credit.

On Wednesday afternoon, a handful of people browsed a RadioShack store in the New York Port Authority bus station as “Bad Girls,” the 1979 hit from Donna Summer, played. The store advertised no deep discounts or sales.

Guillermo Dominguez, a disc jockey from North Bergen, N.J., said he had heard about the store’s financial trouble and was browsing. “It’s mostly a phone store these days,” he said. “There’s nothing they have that I think of as a necessity. But the stores definitely don’t look like what they used to.”

Shares of RadioShack opened at 24 cents on Monday. As rumors of the impending bankruptcy filing swirled, the New York Stock Exchange said it would suspend trading in the stock and sought to delist it, saying that Radio Shack’s market value was too low to qualify its stock to trade on the exchange.

Mr. Pachter said he was puzzled by the trading activity. “It’s amazing the stock continued to trade at a positive value,” he said.

Gloria Diaz, one of RadioShack’s 27,000 employees, said on Wednesday in the New York Port Authority branch that she had no indication that the company was heading toward bankruptcy. “We’re in the clouds,” she said. “Hopefully business picks back up. Pray for us.”
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Re: Radio Shack: Bankrupt at Last

Postby Eldon-Mr.CFAY » Sat Feb 07, 2015 4:10 am

Greetings, Yep I figured this was coming. Radio Shack in the USA has been going downhill badly in recent years, not the company it once was back in the 70s or before! Keep your old catalogs they may become collector items! In Canada its called the Source and has been for many years now owned by Bell Canada and they still sell some parts but again the selection is becoming more limited. The Source Stores in Canada will not be affected by this.

The only Radio Shack store left in Canada that I know of is a private franchise one actually called Radio Shack in Cobourg owned by Dave Treathaway. He had the original Radio Shack store in Cobourg and has kept the store and name despite The Source opening at the mall in Cobourg about 8 or 9 years ago now. He carries a better selection of parts and radio stuff than the Source does and has the red and white Radio Shack sign up on his store on Division Street! Its operated along with his UHAUL rental business!

By the way speaking of Radio Shack, you might remember that Allied Radio was part of Radio Shack back in the early 1970s commonly owned. That long ago changed and they went separate directions. Anyway Allied Radio Electronics is going strong out of Fort Worth, Texas with a huge inventory of electronic parts. I just got their 2015 Printed Electronic Parts Catalog. Its over 2 inches thick!!!! Just love it, it has everything you can think of and dated 2015 brand new each yer. Sorry no Knight Kits like Allied used to sell anymore though. Lots of other stuff though, tons of parts, electronic accessories , tools, cases etc. etc.. I collect radio catalogs and have quite a few of them dating back to the 1960s , wish I had more Lafayette, old Radio Shack ones from the 50s and 60s, and old Allied ones however! I have been getting current electronic parts catalog in the mail and updating prices on new parts currently etc. There are at least 60 electronic radio parts retail stores across Canada and many in the USA too. Montreal and Toronto have the largest selection. But Vancouver has good old RP Electronics which has a nice printed catalog too. They recently moved to Rupert and Grandview Highway in Vancouver. Great company, have been dealing with them since grade 8 when they were on 4th Avenue in Vancouver (known as Rendell-Paret back then). Had a great talk on the phone with them a couple weeks ago. can hardly wait to get back out to BC to pay them a visit! So who needs Radio Shack when we have some great independent electronic retailers like RP Electronics and others! In a way its sad to see an old company like this bit the dust but thats what bad management decisions can do to big corporations!!!

All the best, From Eldon
Bye . . Mr. CFAY "Frequently On The Frequency"
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Re: Radio Shack: Bankrupt at Last

Postby jon » Sat Feb 07, 2015 8:12 am

A couple of the challenges that Radio Shack faced were places like Home Depot starting to carry components for home network wiring and such, and the established electronics wholesalers opening their doors to the general public.

Radio Shack stopped being the "only" place that retail customers could go for electronic parts, especially for Do-It-Yourself projects.

Canada briefly had a whole new Radio Shack "chain" open after existing stores had to become The Source when Radio Shack pulled their brand licensing in Canada. The new chain did not last long in most markets. Especially since their prices were higher than The Source, and none of the new Radio Shacks, at least here, took over existing Radio Shacks.

The Source will undoubtedly under Bell ownership in Canada, though they undoubtedly will have to find new sources for Radio Shack-owned brands. Not hard once they discover AliBaba or other sources of direct supply from China.
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Re: Radio Shack: Bankrupt at Last

Postby J Kendrick » Sat Feb 07, 2015 6:06 pm

Has anyone told the local CB radio club?

Where I am going to find parts now for my Tandy 1000?
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Re: Radio Shack: Bankrupt at Last

Postby mccrady » Sat Feb 07, 2015 8:26 pm

... and what old-timer hasn't pounded out stories at one time or another on the very first tablet computer, the ubiquitous TRS-80 Model 100?

As I recall, the manual (remember them?) was bigger than the machine.

I even scribbled a BASIC program to produce scripts for the old camera/conveyor belt teleprompters we used back in the day. And I don't recall anyone ever breaking one. Very robust units.
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Re: Radio Shack: Bankrupt at Last

Postby radiofan » Sat Feb 07, 2015 8:59 pm

Never had a TRS-80, but somewhere buried away in the basemen is an old Kaypro II.

As for Radio Shack Canada, I always hated that they would not complete the sale until they had your name and address for their catalogue mailing list.

I never did get catalogues or sale flyers in the mail, so I started making up names and addresses.

One of the best portable DX radios I ever bought (and still have almost 40 years later) was the Realistic TRF. It performed as well as or better as the GE Superadio.
Those who danced were thought to be quite insane by those who couldn't hear the music.
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Re: Radio Shack: Bankrupt at Last

Postby jon » Sat Feb 07, 2015 9:13 pm

When I worked at CKUA/Access TV, one of the computer support folks claimed that the TRS-80 had such a cheap keyboard that the operating system watched for rapid double keystrokes and eliminated them, to make up for the failings of the keyboard.
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Re: Radio Shack: Bankrupt at Last

Postby Tom Jeffries » Sat Feb 07, 2015 9:31 pm

I always thought the stores were junky. Sloppy. I expected to see Homer Simpson in one of the aisles.
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Re: Radio Shack: Bankrupt at Last

Postby Mike Cleaver » Sat Feb 07, 2015 11:39 pm

They had their uses back in the day for radio stations, especially those not in major cities.
You could always run down the street for batteries, resistors, capacitors, wire and all kinds of electronic parts that otherwise were only availible by mail or courier.
The old joke for parts from commercial suppliers for radio and TV: If you were in the west, the parts had to come from Toronto. If you were in the east, they had to come from Vancouver.
When a vital piece of equipment failed and you didn't have the specific parts on hand, they could be a lifesaver.
Sadly, over the years, that part of the business became less important and finally, almost disappeared completely.
Now, most hard to get parts come from giants Mouser and Digikey in the US but you have to wait for delivery.
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Re: Radio Shack: Bankrupt at Last

Postby Eldon-Mr.CFAY » Sun Feb 08, 2015 2:17 am

Greetings,
Great postings about this. Yes I have bought a lot of radios and parts over the years from Radio Shack particularly in the 1970s and 1980s. I agree with what Mike posted about the convenience of Radio Shack in Canada and the USA and when they had a much better selection of parts. It was convenient to go to the local Radio Shack and get parts if you did not want to wait. Yep Mouser and Digi-Key in the states are big suppliers of parts in recent years. I have catalogs from both and phoned Digi-Key in Minnesota recently. I have their 2007 catalog but they are not putting out a printed catalog anymore as it became so thick so they advise me to use the old one (from 2007 I have) or check out the website. Quite helpful. I am waiting for the huge thick catalog from Mouser in the states, they are sending me one. Apparently the latest one is 2 inches thick or more like the Allied one.

Radiofan you are absolutely correct that Realistic TRF 655 is a great little radio that Radio Shack put out! I have owned quite a few, sold some and still have about 5 left in Langley and here at the house in Cobourg. I am giving one to my sister and shipping the other ones here to Langley. Great radio. Its sensitivity is as good or not better as the GE Superadios I own. Radio Shack did have some good products as well as bad ones over the years. I have owned three or four of the communication radios over the years including the DX 160 which I really liked the appearance of . Sold them quite a few years ago. Wish I had kept the DX 160! Glad I still have the TRF 655 AM Long Range portables. I still use them for dxing and heard Caracas, Venezuela on 750 khz. in WSB's null with one a year ago and this year too. Yes it came in on my new Grundig 450 too but was just as well received on the Long Range TRF 655! What I found about Radio Shack over the years though is they had a good product for several years that worked well. Then discontinued it. I also got their Long Range AM and FM Radio which was their version of the GE Superadio and it worked well too. Not quite as good as the GE Superadio though.

Anyway interesting reading everyones comments about The Shack. I found it went downhill quite badly when it changed name to The Source in Canada and was bought by Circuit City in the USA who of course went bankrupt quite a few years ago and sold The Source to Bell Canada. As far as I am concerned I hated Circuit City, real crappy company and they downgraded The Source in Canada badly!

Take Care Everyone, 73s Eldon
Bye . . Mr. CFAY "Frequently On The Frequency"
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Re: Radio Shack: Bankrupt at Last

Postby drmusic » Sun Feb 08, 2015 12:03 pm

Mike Cleaver wrote:They had their uses back in the day for radio stations, especially those not in major cities.
You could always run down the street for batteries, resistors, capacitors, wire and all kinds of electronic parts that otherwise were only availible by mail or courier.
The old joke for parts from commercial suppliers for radio and TV: If you were in the west, the parts had to come from Toronto. If you were in the east, they had to come from Vancouver.
When a vital piece of equipment failed and you didn't have the specific parts on hand, they could be a lifesaver.
Sadly, over the years, that part of the business became less important and finally, almost disappeared completely.
Now, most hard to get parts come from giants Mouser and Digikey in the US but you have to wait for delivery.


Hee! I can remember working in one newsroom where our tape recorders were off-the-shelf Radio Shack consumer-grade models (after they retired the old Marantz one-ton machines)
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