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Strategies & Market Trends : Turnarund Investing

NOVS 0.0666

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Aug 1 5:00 PM EST

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To: thatsnotluck who wrote (566)	4/26/2012 6:42:01 PM
From: grahamcracker	Read Replies (1) of 1876

RSH - <<perhaps the problem is 'why would anyone want to buy anything at RSH' is a question few possible customers have an answer to, >> Here's a quantitative answer: Revenues: 2007 - $4,075M (note that this is pre-recession) 2008 - $4,035 2009 - $4,073 2010 - $4,266 2011 - $4,378 Note the growth in revenues right through the recession. Somebody has answered the question with their wallet. The issue, at least thus far, is not plummeting sales. Even the Q1 2012 "disaster" is a <1% decrease in sales. Asia is booming and credited with saving their bacon in recent articles as if Asian results are a one-off. Gross profit margin has dropped from 44.9% to 41.4% YOY (using 10K) which lends support to their claim that costs and cut-throat competition are the major culprits. This is opposed to GP margin of 47.5% in 2007. GP margin for Q1 2012 is 39%. Here's some more support: timesofindia.indiatimes.com How long will Apple's pricing power over retailers last? I say not forever and I'll put money on it. (already have). So, if you're looking for an Apple short that's not a kamikazee mission (as directly shorting Apple surely would be). Long RSH is one approach. As far as qualitative anecdotes, my local Radioshack is great but one-off anecdotes don't do a whole lot for me when evaluating a $4B company.

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