RadioShack to add cable partner
Thursday, July 27th 2000, 12:00 am
By: News On 6
Quarterly earnings rise 27%, beating expectations by 2 cents
RadioShack Corp. chief executive Leonard Roberts said Wednesday that he plans to announce an agreement with a cable service provider to sell Internet access in RadioShack outlets before the end of the year.
A cable partner would round out the consumer-electronics retailer's offerings in high-speed Internet access.
Mr. Roberts' comments came during an earnings announcement.
RadioShack said second-quarter earnings per share rose 27 percent, topping Wall Street's expectations by 2 cents a share.
Earnings were $75 million (38 cents), up from $61.6 million (30 cents) in the second quarter last year.
Analysts expected 36 cents a share, according to a poll by First Call/Thomson Financial.
Total sales were $1 billion, up 15 percent from $887 million in the comparable period a year ago.
Fort Worth-based RadioShack said products in its computer, audio, video, direct-to-home satellite and digital wireless categories saw sales increases and led the quarter's gains.
Mr. Roberts said the cable and other upcoming deals will add "substantially" to the company's residual income, which is pure profit on service contracts over and above regular earnings.
"We will launch in the fourth quarter our broadband message," he said.
Mr. Roberts has been trying to add a cable partner to the lineup but so far has not been successful.
Dennis Telzrow, an analyst with Hoak Breedlove Wesneski & Co., was once skeptical that RadioShack could find a cable partner, but now he thinks Mr. Roberts will pull it off.
"Companies such as Sprint like the footprint they get in the RadioShack retail stores, and I think the cable guys are seeing what the same thing can do for them," he said.
RadioShack, long known for plugs, connectors and other accessories, has built relationships with RCA, Compaq Computer Corp. and Sprint Corp. The vendors have their own area in the store to display products.
Mr. Roberts said consumers have been slow to adopt broadband services because they aren't sure what it is, where to get the service or how much to pay. "There's a 'You've got to see it to believe it' quality to broadband, and that's where we come in," he said.
RadioShack aims to be a convenience store for electronics products and a neighborhood source for demystifying the new consumer technologies. The chain estimates that 94 percent of Americans live or work within five minutes of a RadioShack outlet.
Shares of RadioShack rose $3.56 to $60.25 Wednesday.