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Strategies & Market Trends : Can you beat 50% per month? -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (10991)	6/12/2007 6:10:49 PM
From: Smiling Bob	Respond to of 19257

Goldman Likes RadioShack , Analysts Aren't Sold Joshua Lipton, 06.12.07, 5:45 PM ET RadioShack has implemented an aggressive cost-cutting program involving store closings and headcount reductions. The strategy helped the electronic retailer reach consensus-beating first-quarter profits earlier in the year. Goldman Sachs has decided that it's now a good time to take a stake in the company, although not every analyst is so upbeat on RadioShack's future. 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." Allen rated the company "underperform." Michael Souers, an analyst at Standard & Poor's, remains really unenthusiastic about RadioShack's prospects. In a client note dated May 11, Souers acknowledged that the company's chief executive officer Julian Day has extensive retail experience with turnaround situations. However, Souers thinks the longer-term outlook for the company is uncertain, due to a highly competitive environment. "We believe the risk/reward quotient for owning the shares remains negative," Souers wrote. He rated the company a "strong sell." In afternoon trading on Tuesday, shares of RadioShack nudged up 0.1%, or 4 cents, to $33.59, where they have traded between $13.73 and $34.91 over the past 52 weeks. The Associated Press contributed to this article. forbes.com