Added .RSHVF Oct 30's @ 1.55
Goldman Now Top Shareholder In RadioShack
Joshua Lipton, 06.12.07, 1:00 PM ET
RadioShack is in the middle of dramatic cost-cutting program, one that helped drive the electronic retailer to consensus-beating first-quarter profits earlier in the year. As a result Goldman Sachs has decided now is a good time to take a stake in the company.
Goldman Sachs Asset Management has taken a 12.6% piece of RadioShack, according to filings with the Securities and Exchange Commission. That move now makes Goldman Sachs the top shareholder in the company, replacing FMR, which owns Fidelity, as it cut its stake to 7.6%.
RadioShack has zeroed in on slashing costs, closing 500 unprofitable stores and laying off employees from its Fort Worth, Tex. corporate headquarters. That cost-cutting approach resulted in earnings that easily beat Wall Street estimates for the latest quarter. (See: "RadioShack Rocks.")
What does Goldman see in the company now?
Timothy Allen, an analyst at Jefferies, pointed out that consensus remains low for RadioShack, so there are potential upsides to the earnings. But Allen also wondered whether Goldman may be a little late to the game.
"Everybody places a bet," Allen told Forbes.com. "I don't know if you can really say that Goldman is brighter than Fidelity. I'm more inclined to think that Goldman missed the bigger move in the stock. They only got in the last few months. But this was one of the best performers of the year."
Perhaps Goldman thinks RadioShack is a future takeover target, although Allen remains skeptical that any cash-heavy players would make an offer for the company.
"How do you sell it?" Allen asked. "They are at a competitive disadvantage to Best Buyand Circuit City. For one, their accessories business, which was their sweet spot, is being encroached on. Also, they have 6,000 stores. So the touch point for consumers is an advantage. But Best Buy has been adding stores and so has Circuit City. So they are losing relevance. Customers prefer Best Buy and Circuit City. They can find the same items there."
In morning trading, shares of RadioShack nudged down 0.2%, or 7 cents, to $33.48.
The Associated Press contributed to this article. |
